Suppose Becky has her choice of $10,000 at the end of each month for life or a single prize of $1.5 million. She is 35 years old and her life expectancy is 40 more years.
(i) Find the present value of the if money is worth 7.2%, compounded monthly.
(ii) If she takes the $1.5 million, spends $700,000 of it, and invests the remainder at 7.2% compounded monthly, what amount will she receive at the end of each month for the next 40 years?
(a) Decide whether the problem relates to an ordinary or an due, and then
(b) Solve the problem.
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