Problem 1.A

Uncle Fred recently died and left $310,000 to his 55-year-old favorite niece. She immediately spent $90,000 on a town home but decided to invest the balance for her retirement at age 65. What rate of return must she earn on her investment over the next 10 years to permit her to withdraw $60,000 at the end of each year through age 80 if her funds earn 12 percent annually during retirement? Use Appendix A and Appendix D to answer the question. Round your answer to the nearest whole number. %

Problem 1. B

You contribute $1,000 annually to a retirement account for eight years and stop making payments at the age of 45. Your twin brother (or sister . . . whichever applies) opens an account at age 45 and contributes $1,000 a year until retirement at age 65 (20 years). You both earn 9 percent on your investments. How much can each of you withdraw for 15 years (that is, ages 66 through 80) from the retirement accounts? Use Appendix A, Appendix C, and Appendix D to answer the question. Round your answers to the nearest dollar. You can withdraw $ . Your twin can withdraw $ .