As an investment advisor, you have been approached by a client called Ramesh, who wants some help in investment related matters.

Ramesh is currently $45$ years old and has $600,000$ in the bank. He plans to work for $15$ more years and retire at the age of $60.$ Ramesh's present salary is $400,000$ per year. He expects his salary to increase at the rate of $12$ percent per year until his retirement.

Ramesh has decided to invest his bank balance and future savings in a portfolio in which stocks and bonds would be equally weighted. For the sake of simplicity, assume that these proportions will be maintained by him throughout. He also believes that bonds would provide a return of $7$ percent and stocks a return of $13$ percent. You concur with his assessment.

Once Ramesh retires at the age of $60$ he would like to withdraw $500,000$ per year from his investments for the following $15$ years as he expects to live upto the age of $75$ years. He also wants to bequeath $1,000,000$ to his children at the end of his life. How much money would he need $15$ years from now?

How much should Ramesh save each year for the next $15$ years to be able to meet his investment objectives spelt out above? Assume that the savings will occur at the end of each year.

Suppose Ramesh wants to donate $200,000$ each year in the last three years of his life to a charitable cause. Each donation would he made at the beginning of the year. How much money would he need when he reaches the age of $60$ to meet this specific need?

Ramesh recently attended a seminar on human capital where the speaker talked about a person's human capital as the present value of his life time earnings. Ramesh is curious to find out the present value of his lifetime salary. For the sake of simplicity assume that his present salary of $400,000$ will be paid exactly one year from now, and his salary will be paid in annual installments. What is the present value of his life time salary, if the discount rate is $8$ percent? Remember that Ramesh expects his salary to increase at the rate of $12$ percent per year until his retirement.

In answering the above questions, ignore the tax factor.