2. Manuel has saved $700 , 000 throughout his life of work. He is ready to retire but he would like to know what kind of income his savings will provide for him. He wants an income of $5000 per month and he expects to live for 20 years. (a) Draw a cash flow diagram of the cash flow. (4 marks) (b) What interest rate will Manuel need to accomplish what he wants? Use linear interpolation with the table. (4 marks) (c) If Manuel can get 3.5% interest, how much will his monthly income be if his life expectancy is 25 years? (4 marks)
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2- Manuel has saved $700-000 throughout his life of work- He is ready.docx
1. 2. Manuel has saved $700 , 000 throughout his life of work. He is ready to retire but he would
like to know what kind of income his savings will provide for him. He wants an income of $5000
per month and he expects to live for 20 years. (a) Draw a cash flow diagram of the cash flow. (4
marks) (b) What interest rate will Manuel need to accomplish what he wants? Use linear
interpolation with the table. (4 marks) (c) If Manuel can get 3.5% interest, how much will his
monthly income be if his life expectancy is 25 years? (4 marks)
