Jeanette wishes to retire in 30 years at age 55 with retirement savings that have the purchasing power of $300,000 in today’s dollars.
a. If the rate of inflation for the next 30 years is 2% per year, how much must she accumulate in her RRSP?
b. Ifshecontributes$3000attheendofeachyearforthenextfiveyears,howmuch must she contribute annually for the subsequent 25 years to reach her goal? Assume that her RRSP will earn 8% compounded annually.
c. The amount in Part (a) will be used to purchase a 30-year annuity. What will the month-end payments be if the funds earn 6% compounded monthly?