Thomas plans to save up for his childrens future education and living expenses. To achieve this, he invests in an account that guarantees him an annual return of 12% (EAR). He will make constant annual deposits to the account for the next 20 years and the first payment is made next year. He wants to make sure that at the end of the 20th year, there will be $2,000,000 in the account. After the 20-year investment period, the $2,000,000 will be deposited in a savings account for his childrens monthly withdrawal. The interest rate on the savings account is estimated to be 6% (APR compounded monthly). Thomas children will withdraw an equal amount from the account every month for the next 30 years. The first withdrawal will be made one month after the end of the 20th year. Required

a) What is the amount of Thomas annual deposit? (15 points)

b) How much can Thomas children withdraw every month? (10 point