B2. The annuity payout problems studied in class all involved the gradual depletion of the original principal, reducing it to zero at the end of the payout period. If an annuity is being used to fund retirement, a problem with depletion of principal is that the owner of the annuity may outlive his or her savings. a. How much could be with withdrawn quarterly from an annuity of S860,000 with 6.6% annual interest compounded quarterly without depleting the original principal? Hint: Think of this as a simple interest problem. If necessary, round any intermediate decimal values in your calculations to at least 4-decimal places (5-decimal places is preferred). (2 bonus points) b. How much could be with withdrawn annually from an annuity of S860,000 with 6.6% annual interest compounded monthly without depleting the original principal? Hint: This problem is not a simple interest problem. If necessary, round any intermediate decimal values in your calculations to at least 4-decimal places (5-decimal places is preferred). (2 bonus points) 11 Finance Formulas Prt FV = P(1 + r) A-P(1 + rt) SP(1 + ) A P RE FV = P(1+ P= FV ME + -1 A= da A [(1 + 1 - 1 ne 4/(1+3" - 1] F FV = + - + w11- Po = WE 1-(1+) m1- PE -(1+3 1-(1+) 13 Day of Year 001 135 155 219 314 165 Day JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC 1 032 060 091 121 152 182 213 246 305 2 002 033 061 092 122 153 183 214 245 3 275 003 034 062 093 123 154 184 215 275 337 4 004 035 063 094 124 185 216 277 5 005 036 064 095 125 156 186 217 248 278 309 309 6 006 037 065 096 126 157 187 ZIS 249 279 7 007 038 066 097 127 158 188 250 280 311 8 008 039 067 098 128 159 189 220 251 312 9 009 040 068 099 129 160 190 221 252 313 10 010 041 069 100 130 161 191 222 253 11 011 042 070 101 131 162 192 223 254 284 315 12 012 043 071 102 132 163 193 224 255 285 316 345 13 013 044 072 103 133 164 194 225 256 317 14 014 045 073 104 134 195 226 257 287 318 15 015 046 074 105 135 166 196 227 258 288 319 16 016 047 075 106 136 167 197 228 259 289 320 350 17 017 048 076 107 137 168 198 229 260 290 321 351 18 018 049 077 108 138 169 199 230 261 291 352 19 019 050 078 109 139 170 200 231 262 292 323 353 20 020 051 079 110 171 201 232 263 293 324 354 21 021 052 080 111 141 172 202 233 264 294 325 355 22 022 053 081 112 142 203 234 265 326 356 23 023 054 143 174 204 235 266 296 327 357 24 024 055 083 114 175 205 236 267 297 328 358 25 025 056 084 115 145 176 206 268 298 329 26 026 057 085 116 146 177 238 269 299 330 360 27 027 058 086 117 147 178 208 239 270 300 331 361 28 028 059 087 118 148 179 209 240 271 301 332 362 29 029 060 088 119 149 180 210 272 333 363 30 030 089 120 150 181 211 273 303 334 364 31 031 090 151 212 243 365 **For leap years include the boxed day and increase all days past it by one. **For non-leap year, do not include the boxed day and read all days past it as given 140 173 295 082 113 237 359 207 241 302 242 304 14