Unless you need to edit, it's safer to stay in Protected View. Enable Editing FIN 200 Intro of Finance Present Value of an Annuity Problems 1. You've already told your Aunt you want Option 1. The cashflows are: Option 1 100 100 100 0 0 250 Year 0 1 2 3 4 5 6 a. Knowing that you can earn 10% compounded annually, how much of your Aunt's starting investment at t=0) is deposited to fund the first 3 cashflows? In other words, how much does she have to invest today to pay you $100 per year at the end of each of the next 3 years? 1 b. If your Aunt wanted you to have $100 at the end of each of the next 6 years, how much would she have to deposit in the account today? c. In the original problem, your Aunt deposits $390 in the account to fund your gift. Ignoring the option 1 cashflows, how much, in equal amounts, would you be able to withdraw at the end of each of the six years from her original deposit, leaving nothing in the account at the end of six years (Option 3)? 2. You plan to have $500,000 when you retire in 30 years, and live for 20 more years after that, leaving nothing in the account for your ungrateful children. You determine that you can earn 4% per year on an investment account. How much will you be able to withdraw at the end of every year after retirement? w