You are 60 years old. Currently, you have $10,000 invested in an IRA and have just received a lump-sum distribution of $50,000 from a pension plan, which you roll over into an IRA. You continue to make $2,000 annual payments to the regular IRA and expect to earn 9 percent on these funds until you start withdrawing the money at age 70 (i.e., after 10 years). The IRA rollover will earn 9 percent for the same duration.

In this question, consider that you are 60 years old and considering retirement. An insurance company offers to sell you the following Annuity in exchange for a portion of your IRA: • The Annuity commits to paying you 2,000 per month for the next 20 years, with the first payment to be made beginning one month from today. • Your price of the Annuity is $250,000 paid by you today from your IRA. The insurance company is rated AAA, but the investment is not FDIC insured like bank deposits. What is the expected annual rate of return on this investment? What is the Yield-on this investment? That is what is the annual expected rate of return? From an investment point of view, do you consider this a good investment today? Discuss why, or why not.

You would like to have enough money saved to receive a $90,000 per year perpetuity after retirement. The annual interest rate is 8 percent. Required: How much would you need to have saved in your retirement fund to achieve this goal? a) Assume that the perpetuity payments start on the day of your retirement. b) Assume that the perpetuity payments start one year from the date of your retirement.

You will pay into a pension fund until you are aged 65. You are expected to live until your 80th birthday. You are currently 21 years of age. Pension fund contributions are made bi-weekly (use n=2/52) beginning in 2 weeks' time. If you are promised an interest rate of 7% compounded monthly:   1) What should be the size of your contribution if you plan to have $1 million at age 65? 2) Following your final contribution at age 65, you will retire. You will begin to withdraw money at the end of each month at a declining rate. Each subsequent withdrawal will fall by a constant rate of 0.5% per month for the duration of your life. You withdraw the final payment an instant before you die. If the effective annual rate of interest that you can receive on your pension fund is 5%, what is the most that you can withdraw on your first payment? 3) If your contribution is $100.00 bi-weekly, what is the future value of your pension fund immediately after the last payment if the prevailing interest…