1. The first year after you retire you want to be able to withdraw $100,000 from your savings account. Every year after that you want to increase your withdrawals by 2%. You expect that the account will earn 6% annual interest. How much money must you have in your savings account when you retire to make sure that your money lasts for 20 years?
$1,146,992.12
None of the Above
$1,341,686.45
$4,302,970.19
$1,635,143.33
2. You win a scratch off lottery ticket that promises to pay an initial payment of 10,000 this year and grow at a rate of 5% forever. If the discount rate is 8%, what is the present value of this investment?
$350,000.00
$400,000.00
$300,000.00
$500,000.00
None of the above