Question: Under the NBA deferred compensation plan, payments made at the end of each year accumulate up to retirement and then retirees are given two options.

Under the NBA deferred compensation plan, payments made at the end of each year accumulate up to retirement and then retirees are given two options. Option 1 allows the retiree to select the amount of the annual payment received and option 2 allows the retiree to specify over how many years payment are to be received. Assume Rodman has had $6000 deposited at the end of each year for 30 years, and that the long-term interest rate is 8%.

How much has accumulated?

How much will Rodman be able to withdraw at the beginning of each year if he elects to receive payments for 15 years?

How many years will Rodman be able to receive payments if he chooses to receive $65,000 per year at the beginning of each year?

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