1.a. Mr. & Mrs. Smith are clients of your financial advisory firm. Between the two of them, they have disposable income of $1,600 per month. They would like to contribute half of that to an IRA account. The IRA investments that you recommend should generate returns of about 8% per year on average. Mr. Smith is 30 and Mrs. Smith is 32. They plan to retire when they are 62 and 64 respectively. If their IRA contribution remains constant, how much will they have saved at retirement? 1.b. Assume the same facts about the Smiths except that they are able to increase their retirement contributions each year by 2% owing to increases in their overall income. How much can they save by the time they retire? Use this equation and remember to adjust r and n for monthly calculation: FV=PMT (1+r)"-(1+g)" (r-g)

1.a. Mr. \& Mrs. Smith are clients of your financial advisory firm. Between the two of them, they have disposable income of $1,600 per month. They would like to contribute half of that to an IRA account. The IRA investments that you recommend should generate returns of about 8% per year on average. Mr. Smith is 30 and Mrs. Smith is 32. They plan to retire when they are 62 and 64 respectively. If their IRA contribution remains constant, how much will they have saved at retirement? 1.b. Assume the same facts about the Smiths except that they are able to increase their retirement contributions each year by 2% owing to increases in their overall income. How much can they save by the time they retire? Use this equation and remember to adjust r and n for monthly calculation: FV=PMT[rg(1+r)n(1+g)n]