Reference no: EM132363274

Answer the following Questions :

1. Liz is required to take out approximately 3.7% of the balance in the IRA in the first year and the percent increases each year. The IRA will essentially be all used by age 100. She may take out more than the minimum each year if she chooses. If Liz expects the IRA to earn 10% each year, will her IRA balance grow in the first 4 months years if she takes out an amount equal to the annuity payment? Calculate the earnings on an annual basis and use the total of 12 months of the annuity for the amount she will take out.

2. If Liz expects to earn 3% on the IRA, and she takes out an amount equal to the annuity payment, the IRA should end at zero in 17.5 years. Should Liz take the annuity or move the money to the IRA? What factors would influence her decision?

3. Kathy plans to move to Maryland and take a job at Mccormick as the assistant director of HR. She and her husband, Stan, plan to buy a house in Garrison, MD, and their budget is $500,000. They have $100,000 for the down payment and Mccormick will pay for closing costs. They are considering either a 30-year mortgage at 4.5 percent annual rate or a 15 year mortgage at 4 percent. Calculate the monthly payment for each using the PMT function.