(B) As another option, Mrs. Smith is considering letting her heirs fend for themselves and using her $420,000 to generate $3,300 per month for the rest of her life.

1. If Mrs. Smith manages to deposit the $420,000 at a an APR of 8% per year (8% APR =

8% / 12 per month) and receives $3,300 per month, what age will she be when her funds run out?

Years old.

2. If Mrs. Smith plans to live to age 93, at what monthly interest rate must she deposit the $420,000 to be able to receive $3,300 per month with no balance left in the account at her death?

%.

(C) As her last option, Mrs. Smith is considering leaving an endowment to her Alma Mater that will produce $10,000 a year forever.

1. If the current rate for such investment is 4%, how much money must Mrs. Smith deposit to generate $10,000 per year forever?

$.

2. If the current rate for such an investment is 6% and inflation is expected to be 1.5% per year, how much money must Mrs. Smith deposit to generate the equivalent of $10,000 per year, after inflation, forever? (i.e. the $10,000 would need to grow by 1.5% every single year).

$.

Answer rating: 100% (QA)

To answer your questions Ill perform the necessary calculations Lets begin B Option 1 Mrs Smith plans to deposit 420000 at an Annual Percentage Rate APR of 8 and withdraw 3300 per month We need to det... View the full answer