Question
Albert Chens uncle has promised to give Chen $500,000 per year for the next years 10 years, beginning one year from today (There are 10
Albert Chens uncle has promised to give Chen $500,000 per year for the next years 10 years, beginning one year from today (There are 10 payments altogether from your uncle). Assume Chen could invest the payments at 12% compounded annually. At the end of 10 years, Chen plans on retiring. After 10 years Chen is certain he can reinvest at 14% per year. What equal annual cash flows can Chen withdraw for his retirement, beginning at the end of the eleventh year? Assume Chen can live for 80 years after his retirement. (80 withdrawals altogether). A. 911,338.99 B. 816,238.99 C. 1,239,118.22 D. 1,228,445.88 E. 874,992.31
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