<7> Challenging question & Real-world experience (Personal Financial Planning)

You believe you will need to have saved $1,000,000 by the time you retire in 40 years in order to live comfortably. In order to meet your retirement goal, how much must you save each year before you retire (i.e., over the next 40 years)? Assume the interest rate will averagely 6% per year over the period.

<8> (Deferred Annuity)

How much is the present value of the following multiple cash flow? Each of the cash flows is equal to $5,000. The first cash flow starts at the end of year 7; and the last cash flow ends at the end of year 20. Assume interest rate is 10%.