1. Harold Filbert is 30 years old and his salary next year will be $20,000. Harold forecasts that his

salary will increase at a steady rate of 5 percent per annum until his retirement at age 60.

(a) If the discount rate is 8 percent, what is the PV of these future salary payments?

(b) If Harold saves 5 percent of his salary each year and invests these savings at an interest rate of

8 percent, how much will he have saved by age 60?

(c) If Harold plans to spend these savings in even amounts over the subsequent 20 years, how

much can he spend each year?