1. Charley can afford to save a net amount (contribution minus tax refund) of $7,000 a year in his RRSP for 5 years in order to return to school. His average tax rate is 30% and his marginal tax rate is 40%. If he is willing to borrow money to cover the two or three months between his RRSP contribution and his tax refund, how much can he contribute to his RRSP each year? Ignore the interest on the short-term loan.
   1. $7,000
   2. $10,000
   3. $11,667
   4. $4,900
   5. $4,200