211.3 & 4
3. Let's say that you expect to work for another 40 years. How much would you need to deposit today to set up an account that would pay $1000 per year forever, starting one year from your retirement (after you die, it would be split among your heirs). The relevant interest rate is 8%. (2 pts.)
4. Which of the following two changes to the above would each force you to make a larger deposit AND WHY? (1 pt.)
--you expect to retire sooner and interest rates are higher
--you expect to retire later and interest rates are higher
--you expect to retire sooner and interest rates are lower
--you expect to retire later and interest rates are lower
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