2. Find the present value of a 5% annuity compounded monthly if you plan to receive payments of $200 every month for the next three and a half years. 3. John calculated that he would need an additional $1,000 a month during his 25 years of retirement. His annuity pays 4.75% interest compounded monthly. What is the necessary present value he needs in his account the day he retires? 4. From problem 3, how much interest did John earn while he was drawing his retirement? 5. If John from problem 3&4 has 40 years before retirement, how much should he contribute monthly to his retirement to reach his goal calculated in problem 3 assuming the same 4.75% rate? 6. How much interest did John earn during his 40 year working life in problem 5? 7. How much total interest did John earn over the 65 years of his investment (combine problems 4 & 6)? Answers: 1. 2. $1,794.63; 3. $175,402.50; 4. $124, 597.50; 5. $122.65 monthly into annuity; 6. $116, 530.50 interest earned in first 40 years; 7. $250 monthly earns half a million dollars in interest.