(b) Capital Preservation Model (amount to leave for an estate) Recall that amount needed for Jane at age 62 calculated from the pure annuity model was $1,278,956.36. If that amount is discounted at the expected earnings of 10%, what is the additional amount of capital necessary to leave an estate of $1,278,956.36? N=I/Y=PMT=FV=PV=330.10$3,657,436.60($157,477.39)PV(D8,D7,D10,0)10%0(amountatlifeexpectancy-95yearsold)(amountat62yearsold) Amount needed =$3,657,436.60+$157,477.39=$3,814,913.99 (c) Purchasing Power Preservation (amount needed to retain purchasing power) The pure annity model amount of $3,657,436.60 is adjusted for inflation N=I/Y=PMT=FV=PV=330.0576920$3,657,436.60($574,543.03)(10%adjustedforinflation)PV(D22,D21,,D24,0) [(1.10/1.03)1]100=6.7961% =PV(RATE, NPER,PMT, FV,0) Amount needed =$3657436.60+$574,543.03=$4,231979.63 (b) Capital Preservation Model (amount to leave for an estate) Recall that amount needed for Jane at age 62 calculated from the pure annuity model was $1,278,956.36. If that amount is discounted at the expected earnings of 10%, what is the additional amount of capital necessary to leave an estate of $1,278,956.36? N=I/Y=PMT=FV=PV=330.10$3,657,436.60($157,477.39)PV(D8,D7,D10,0)10%0(amountatlifeexpectancy-95yearsold)(amountat62yearsold) Amount needed =$3,657,436.60+$157,477.39=$3,814,913.99 (c) Purchasing Power Preservation (amount needed to retain purchasing power) The pure annity model amount of $3,657,436.60 is adjusted for inflation N=I/Y=PMT=FV=PV=330.0576920$3,657,436.60($574,543.03)(10%adjustedforinflation)PV(D22,D21,,D24,0) [(1.10/1.03)1]100=6.7961% =PV(RATE, NPER,PMT, FV,0) Amount needed =$3657436.60+$574,543.03=$4,231979.63