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Bill, age 4 5 , wants to retire at age 6 0 . He currently earns $ 6 0 , 0 0 0 per year.

Bill, age 45, wants to retire at age
60. He currently earns $60,000 per
year. His goal is to replace 80% of his
preretirement income. He wants the
retirement income to be adjusted for
inflation. Bill has an investment
portfolio valued at $150,000, which is
currently earning 10% average annual
returns. Bill expects inflation to
average 3% and, based on his family
health, predicts he will live to age 90.
Bill is currently saving 7% of his gross
income at each year-end and expects
to continue this level of savings. Bill
wants to ignore any Social Security
benefits for purposes of retirement
planning.
How much total capital will Bill
need at age 60?
A. $1,234,523.37
B. $1,034,278.12
C. $1,011,685.49
D. $1,016,984.35
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