Question

Problem 39:

You have just turned 30 years old, have just received your MBA, and have accepted your first job. Now you must decide how much money to put into your RRSP. Your RRSP works as follows: Every dollar in the plan earns 7% per year. You cannot make withdrawals until your 65th birthday. After that point, you can make withdrawals as you see fit. You decide that you will plan to live to 100 and work until you turn 65. You estimate that to live comfortably in retirement, you will need $100,000 per year starting at the end of the first year of retirement (i.e., when you turn 66) and ending on your 100th birthday. You will contribute the same amount to the plan at the end of every year that you work. How much do you need to contribute each year to fund your retirement?

**please list out step by step actions, please show the formulas used, please DONT USE excel**

Problem 40:

* Problem 39 is not very realistic because most people do not contribute a fixed amount to their RRSP each year. Instead, you would prefer to contribute a fixed percentage of your salary each year. Assume that your starting salary is $75,000 per year and it will grow 2% per year until you retire. Assuming everything else stays the same as in Problem 39, what percentage of your income do you need to contribute to the plan every year to fund the same retirement income?

**please list out step by step actions, please show the formulas used, please DONT USE excel**

Answer 1