Your 75-Year-Old Grandmother Expects to Live for Another 15 Years

question 72

Multiple Choice

Your 75-year-old grandmother expects to live for another 15 years.She currently has $1,000,000 of savings,which is invested to earn a guaranteed 5% rate of return.If inflation averages 2% per year,how much can she withdraw (to the nearest dollar) at the beginning of each year and keep the withdrawals constant in real terms,i.e.,growing at the same rate as inflation and thus enabling her to maintain a constant standard of living?

• A) $65,632
• B) $72,925
• C) $81,027
• D) $89,130
• E) $98,043

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Definitions:

Rock Springs

A location known for the Rock Springs Massacre, an 1885 riot against Chinese immigrant miners in Rock Springs, Wyoming, highlighting racial tensions in the American West.

Wyoming

A U.S. state known for its vast plains and Rocky Mountain ranges, became the first state to grant women the right to vote in 1869.

Race Riot

Refers to a public outbreak of violence between racial groups in a community, often reflecting underlying social tensions.

Chinese Miners

Refers to miners of Chinese origin, historically significant in various mining operations globally, particularly during gold rushes in countries like the United States, Australia, and Canada.