Question 3 - How much should you save? In the previous question, you feel that you would rather like an income of $20,000. What is the price of an annuity that pays off $20,000 at the end of every month for 20 years? Use the annual rate of 5%. a. Approximately 3 million dollars. b. Approximately 500,000 dollars. c. Approximately 2.5 million dollars. d. Approximately 4 million dollars. Question 4 - Gordon Formula for valuing an apartment You hold an apartment that pays $24,000 of net rental income every year. The opportunity cost of capital is 8%, and the rent grows by 3% a year for the foreseeable future. What is the value of this apartment? a. $520,000 b. $1,200,000 c. 5480,000 d. 5375,000