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3. Time value of money You plan to retire in 45 years. You would like to have a monthly retirement income of $5,000 and expect

image text in transcribed 3. Time value of money You plan to retire in 45 years. You would like to have a monthly retirement income of $5,000 and expect to live for 21 years after retirement. You expect to earn on average 6.5% per annum compounded monthly over the entire period. Required You can use the formulas at the back of this question booklet. You may rip off the back page for ease of use. Provide all working. a. What is the effective annual rate (EAR)? (4 marks) b. How much will you need to have saved by the time you retire? (7 marks) c. How much will you need to save each month for the next 45 years to have the retirement income you desire (the amount you calculated in (b))

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