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1.A. Alicia has a job with a DC regulator that offers a terrific benefit package. The agency…

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1.A. Alicia has a job with a DC regulator that offers a terrific benefit package. The agency contributes an annuity of $570 into a bank account in her name at the end of each month, beginning one month from today. Alicia estimates that she will work for the next 34 years (for 408 months), when at that point she’ll retire. At the time of her retirement, Alicia plans to withdrawal monthly amounts for 25 consecutive years (for 300 months), beginning at the end of the first retirement month. Assuming an interest rate of 9% annually, what is the maximum amount Alicia will be able to withdrawal, per month, during her retirement years?

B. Consider a lottery that pays to the winner an annual annuity of $36 that begins in one year and continues for 7 consecutive years with one exception — the payment at the end of year 3 (and only in this year) is not $36 but instead is $54. Using an interest rate of 2%, determine the present value of this prize.

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