Mary wants to retire and receive $250,000 a year from her 401(k). She thinks she will need the money for 25 years. She thinks she can earn 4.5% interest on her retirement account when she retires.

[1] About how much must be in her retirement account when she retires?

[2] After 25 years, about how much will be remaining in her retirement account? WHY?

		[1] $6,250,000; [2] $250,000; there will always be one payment left.
		[1] $2,500,000; [2] $2,500,000; that is how much will be needed for the next payment.
		[1] $3,707,052; [2] Zero; the retirement account will be amortized to zero.
		[1] $3,707,052; [2] $3,707,052; it is a perpetuity.and it will be passed to her heirs.