Your client is 36 years old. She wants to begin saving for retirement, with the first payment to come one year from now. She can save $4,000 per year, and you advise her to invest it in the stock market, which you expect to provide an average return of 6% in the future.

If she follows your advice, how much money will she have at 65? Do not round intermediate calculations. Round your answer to the nearest cent.

$

How much will she have at 70? Do not round intermediate calculations. Round your answer to the nearest cent.

$

She expects to live for 20 years if she retires at 65 and for 15 years if she retires at 70. If her investments continue to earn the same rate, how much will she be able to withdraw at the end of each year after retirement at each retirement age? Do not round intermediate calculations. Round your answers to the nearest cent.

Annual withdrawals if she retires at 65: $

Annual withdrawals if she retires at 70: $

Kristina just won the lottery, and she must choose among three award options. She can elect to receive a lump sum today of $61 million, to receive 10 end-of-year payments of $9.1 million, or to receive 30 end-of-year payments of $5.3 million.

If she thinks she can earn 7% percent annually, which should she choose? -Select-She should accept the 30-year payment option as it carries the highest present value.She should accept the lump-sum payment option as it carries the highest present value.She should accept the 10-year payment option as it carries the highest present value.She should accept the lump-sum payment option as it carries the highest future value.Item 1

If she expects to earn 8% annually, which is the best choice? -Select-She should accept the lump-sum payment option as it carries the highest present value.She should accept the 30-year payment option as it carries the highest present value.She should accept the 10-year payment option as it carries the highest present value.She should accept the lump-sum payment option as it carries the highest future value.Item 2

If she expects to earn 9% annually, which option would you recommend? -Select-She should accept the lump-sum payment option as it carries the highest present value.She should accept the 30-year payment option as it carries the highest present value.She should accept the 10-year payment option as it carries the highest present value.She should accept the 30-year payment option as it carries the highest future value.Item 3

Explain how interest rates influence her choice. -Select-The higher the interest rate, the more valuable it is to get money rapidly.The lower the interest rate, the more valuable it is to get money rapidly.The higher the discount rate, the higher the more distant cash flows are valued.Interest rates do not influence the optimal choice in any way.Interest rates and the present value of cash flows are positively related.Item 4