A couple will retire in 50 years; they plan to spend (in today's dollars) about $30,000...

A couple will retire in 50 years; they plan to spend (in today's dollars) about $30,000 a year in retirement, which should last about 25 years. They believe that they can earn 8% interest on retirement savings. The inflation rate over the next 75 years is expected to average 5%.

a. What is the real annual savings the couple must set aside? Assume they will discontinue saving when they retire. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

b. How much do they need to save in nominal terms in the first year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

c. How much do they need to save in nominal terms in the last year? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

d. What will be their nominal expenditures in the first year of retirement? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

e. What will be their nominal expenditures in the last year of retirement? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

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Expert Solution

jeff jeffy answered 1 year ago

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