Problem
I. Pascal has just agreed with his financial planner to begin a voluntary accumulation plan. He will invest $500 at the end of every three months in a balanced mutual fund. How much will he plan be worth after 20 years if the mutual fund earns: a. 8% compounded quarterly?
II. You just won the BC 649 jackpot of $5,000,000 and would like to set aside a portion of it so to fund a scholarship for your favorite school that pays $20,000 per year for a hundred years. Your bank pays a 2% rate of interest. How much money will you have to set aside from the lottery winnings?
III. Your client currently has accumulated capital of $560,000 and hopes to retire this year. She wants to receive an annuity payment at the beginning of each year for the next 20 years. If the capital can earn 6% compounded annually, what maximum annual payment can she receive and just deplete the capital after 20 years?