Anne-Marie and Yancy calculate their current living expenditures to be $96,000 a year. During retirement they plan to take one cruise a year that will cost $5,000 in? today's dollars.?Yancy estimated that their annual benefits from retirement plan A and Plan B to be about $17,000 and $M50,000 respectively.

a) How much income, in todays currency, will Anne-Marie and Yancy need in retirement, assuming replacement ratio for current living expenditure is 70 per cent and an additional $5,000 for the cruise? (5 marks)

b) Calculate the shortfall in todays currency and determine how much the shortfall will be in 30 years assuming it grows at the 3.5 percent rate of inflation. (10 marks)

c) Determine, in dollars, how much they need to have saved if they wish to withdraw to cover the shortfall, assuming they earn an inflation adjusted rate of 6 per cent (that is, 9.5% - 3.5%) per year on their Investment (30-year annuity). (10 marks)