Client #17

Carlos won the lottery! After paying the taxes he had $4.5 million left over. He wanted to invest it an annuity and pay himself $18,000 monthly from that account. Your bank is offering him 2.75% interest compounded monthly for 30 years. He wants to know how much he needs to invest now to receive his monthly amount.

1. (5 pt) Determine how much Carlos will have to invest now. Write out 1) the correct formula with variables (e.g. P₀, P_N, N, r, etc.), and 2) the correct formula with the numerical values (round your answer to the nearest cent, 3) write the answer in a complete sentence.

2. (2 pt) With the remaining money, Carlos wants to go on a spending spree. How much can he spend on his spending spree? Write out 1) show all your steps, and 2) write the answer in a complete sentence.