Under the NBA deferred compensation plan, payments made at the end of each year accumulate up to retirement and then retirees are given two options. Option 1 allows the retiree to select the amount of the annual payment received and option 2 allows the retiree to specify over how many years payment are to be receieved. Assume Rodman has had $6000 deposited at the end of each year for 30 years, and that the long-term interest rate is 8%.
- How much has accumulated?
- How much will Rodman be able to withdraw at the beginning of each year if he elects to receive payments for 15 years?
- How many years will Rodman be able to receive payments if he chooses to receive $65,000 per year at the beginning of each year?