Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You win the lottery and take the lump-sum payment today of $69 million (already after-tax). You decide to invest this money into an investment account

image text in transcribed

You win the lottery and take the lump-sum payment today of $69 million (already after-tax). You decide to invest this money into an investment account at a nominal 10.4% APR, compounded annually. You want to pay yourself a monthly CF from this investment account. You want the CFs to stay the same value every month, with the first payment next month, and you want the investment account to make monthly payments for the next 80 years (which is as long as you expect to live). a. How much would your investment account be able to pay you each month so that, exactly 80 years from now, the last payment would completely empty your investment account? Assume the first monthly payment would be exactly one month from now. First payment would be s (Round to the nearest dollar) b. You enact the plan from part (a), and pay yourself that amount every month for the rest of your life. But you only end up living exactly 60 more years. How much money would be in your investment account in exactly 60 years? Assume that the amount of money in your account would include the payment that was planned for exactly 60 years from today. Remaining balance in exactly 60 years would be $ (Round to nearest dollar)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Finance A Quantitative Introduction

Authors: Nico Van Der Wijst

1st Edition

1107029228, 978-1107029224

More Books

Students also viewed these Finance questions