Questions 16-20 all refer to the following
situation: Because an expert member of the State Board
of Nursing-Home Regulation is paid as a consultant rather
than as a regular employee, she is not a participant in
the state's retirement plan. With 30 years to go until
age 65, she feels she needs to build up a "nest egg" of
$300,000 to support herself in retirement. She has
worked out a deal with Globe Insurance Co. for an annual
interest rate of 9.6% compounded monthly over the 30-year
period until retirement and now needs to know how large a
monthly deposit she will have to make in order to guarantee
a nest egg of that size.
16. This problem requires using the formula for:
c. annuities
Nope,
if you look at
the figure below, you might see what phase of the cycle the
consultant is in.
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