Reference no: EM131863544

1. What amount will be required to purchase, on man’s 40th birthday, an annuity to provide him with thirty equal semi-annual of $1000 each, the first to be received on his 50th birthday, if nominal interest rate is 12% compounded semi-annually?

2. An engineer is thinking of starting a part-time consulting business next September 5,on his 40th birthday. He expects the business will require an initial cash outlay of $5000, to come from his savings, and will cost $500 per year to operate; the business ought to generate $2000 per year in cash receipts. During the 20 years that he expects to operate the business, he plans to deposit the annual net proceeds in a bank each year, at an interest rateof8% per year, compounded annually. When he retires, on his 60th birthday, the engineer expects to invest whatever proceeds plus interest he then has from the business in a long-term savings plan that pays 10% per year, compounded annually. What is the maximum amount he could withdraw from the savings plan each year during his retirement and still have the funds last 15 years.