1. Based on the budget constructed, he estimated that he would spend $350,000 every year during his post retirement life. Assuming he could earn a 7% return per annum during his post retirement period, calculate how much retirement saving Carlson needs to have when he reaches 60 years old. (4 marks)

2. At the moment Carlson has a saving of $800,000. Assuming he could earn a 5% return per annum for the next 25 years:

   a. Would Carlson have enough retirement saving at 60 as calculated per (2) above?

2

2. If not, what is the approximate annual return Carlsons saving needs to achieve if he wants to have enough retirement saving at 60 as calculated per (1) above? For this part, please use Appendices A to D to find out the approximate annual return.

3. By using a financial calculator, calculate the exact annual return required if Carlson would like to have enough retirement saving at 60 as calculated per (1) above. For this part, please use a financial calculator. (9 marks)

3. Carlson would like to make use of his current saving of $800,000 plus contributing a fixed amount of annual saving at the end of the coming 25 years to achieve the retirement saving as calculated per (1) above.

Calculate the annual saving Carlson needs to contribute during the next 25 years, assuming both the saving of $800,000 and the annuity could earn a 5% return per

annum.

(7 marks)