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Make monthly withdrawals

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1. You have $320,000. You put it in an account for 10 years, then you make monthly withdrawals for the next 20 years. If interest earns 5.2% compounded semi-annually, what is the size of the monthly payment?(hint: this is a case of the deferred annuities ; monthly withdrawals to semi annual interest. So, you would use general annuities formula).

2. You invest in a company with a quarterly $1.25 dividend. If you require a return of 8% compounded semi-annually, what is the value of the shares? (hint: this is a general perpetuity case; use it to get the PV i.e. the value of the shares)

3. How much will you have 20 years from today if you deposit $2,000 at the end of this year, then increase your annual contributions by 2% thereafter? Interest is 5% compounded annually

Reference no: EM133061858

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