17. Your grandmother just died and left you $100,000 in a trust fund that pays 5.6% interest. You must spend the money on your college education, and you must withdraw the money in 4 equal installments, beginning immediately. How much could you withdraw today and at the beginning of each of the next 3 years and end up with zero in the account? *

a. $24,736

b. $26,038

c. $27,409

d. $28,779

e. None of the above

18. Your Uncle is about to retire, and he wants to buy an annuity that will provide him with $85,000 of income a year for 25 years, with the first payment coming immediately. The going rate on such annuities is 15%. How much would it cost him to buy the annuity today? *

a. $1,063,968

b. $1,119,966

c. $1,178,912

d. $1,240,960

e. None of the above

19. An investor is forming a portfolio by investing $50,000 in stock A that has a beta of 2.50, and $25,000 in stock B that has a beta of 1.90. The return on the market is equal to 6 percent and Treasury bonds have a yield of 4 percent. What is the required rate of return on the investors portfolio? *

a) 6.6%

b) 6.8%

c) 5.8%

d) 7.0%

e) None of the above