Barbara wants to save money to meet 2 objectives:

i. She would like to be able to retire 25 years from now and have a pension for 15 years after that. She would like to get the first annual payment on the pension 26 years from now, and she would like it to be $30,000 (for 15 years). ii. She would also like to purchase a $40,000 car at the start of her retirement, 25 years from now. The interest rate (cost of capital) at which Barbara can lend and borrow is 6% per year. Assume she deposits the same amount of savings S at the end of each year for 25 years, with the first deposit of annual savings being 1 year from now.

What is the present value of Barbaras planned expenses (described in (i) and (ii): the pension plan and car)?

Please explain.