3. An investor has $85,000 that he can invest today. In addition to this amount, he can also invest $9,250 per year for 15 years (beginning one year from now) at which time he will retire. He plans on living for 10 years after he retires.

a) If interest rates are 3.5%, what size annual annuity payment can he obtain for his retirement years? (All annuity payments are at year-end)

b) If the person wants to leave all his savings to his son without withdrawing his pension payments, how much would be inherited by his son when he passes away?