a) Your client is 34 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $14,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 12% in the future.

If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent.

$__?__

How much will she have at 70? Do not round intermediate calculations. Round your answer to the nearest cent.

$__?__

She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round intermediate calculations. Round your answers to the nearest cent.

Annual withdrawals if she retires at 65:$__?__

Annual withdrawals if she retires at 70:$__?__

b) Find the future values of the following ordinary annuities:

FV of $600 paid each 6 months for 5 years at a nominal rate of 9% compounded semiannually. Do not round intermediate calculations. Round your answer to the nearest cent.

$__?__

FV of $300 paid each 3 months for 5 years at a nominal rate of 9% compounded quarterly. Do not round intermediate calculations. Round your answer to the nearest cent.

$__?__

These annuities receive the same amount of cash during the 5-year period and earn interest at the same nominal rate, yet the annuity in part b ends up larger than the one in part a. Why does this occur, choose the correct option that is in parenthesis?

(The nominal deposits into the annuity in part (b) are greater than the nominal deposits into the annuity in part (a).)

(The annuity in part (a) is compounded less frequently; therefore, more interest is earned on previously-earned interest.)

(The annuity in part (a) is compounded more frequently; therefore, more interest is earned on previously-earned interest.)

(The annuity in part (b) is compounded less frequently; therefore, more interest is earned on previously-earned interest.)

(The annuity in part (b) is compounded more frequently; therefore, more interest is earned on previously-earned interest.)

c) You have saved $3,000 for a down payment on a new car. The largest monthly payment you can afford is $300. The loan will have a 15% APR based on end-of-month payments. What is the most expensive car you can afford if you finance it for 48 months? For 60 months? Do not round intermediate calculations. Round your answers to the nearest cent.

Financed for 48 months: $__?__

Financed for 60 months: $__?__