35. Suppose you won a $75,000 after-tax cash prize in the lottery. You want to start a new business that you think will lose money for awhile, after which it will be up and running and bringing in big bucks. You plan to invest the funds immediately in securities that are expected to earn 10% per year. Suppose you would need only $20,000 per year during the start-up period. How long could you operate before you would require cash from the new business, i.e., how long could you receive payments of $20,000 per year? The first withdrawal will be made a year from today, and your answer will contain a fraction of a year.
38. Suppose you won a $75,000 after-tax cash prize in the lottery. You want to start a new business that you think will lose money for 3 years, after which it will be up and running and bringing in big bucks. You plan to invest the funds immediately in securities that are expected to earn 10% per year, and you plan to make 3 equal annual withdrawals, beginning 1 year from today. Under these conditions, how large would each withdrawal be so no funds remain after the 3rd withdrawal?