David and Mia Wang have come to ask you for some help in their post-retirement planning. They are age 68 and 64 respectively. They have various pension entitlements and assets. They figure they need about $60,000 per year after-tax for their lifestyle expenditures. They want to know if they have enough resources. In order to determine if they have enough savings and income to cover their lifestyle expenditures, you may have to take into account the Consumer Price Index (CPI) to protect them from the future increases of prices. Also, you may have to take into account Income Taxes if the funds are not derived from tax-paid capital or from non-registered savings. As their Financial Planner, David and Mia want to know if they have enough savings to meet their lifestyle expenditures during their planning horizon.

a. How much will they require in todays dollar in order to meet their desired income stream over their planning horizon in todays dollar based on their savings in their tax-paid capital? Assume an annual return of 5% and a tax rate of 35% and not taking inflation into account.

b. How much will they require in todays dollar in order to provide a constant (that is, non-indexed) $60,000 after-tax per year for their planning horizon in todays dollar based on their savings in their registered plans? Assume an annual return of 5% and a tax rate of 35% and not taking inflation into account.