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. Questions (2 marks for each answer): 1) What is the retirement planning horizon for the purpose of their post-retirement income plan? 2) Assuming a nominal return of 8.2% and an inflation rate of 2.4%, what is the real rate of return? 3) Assuming a nominal return of 8.2%, an inflation rate of 2.4% and a marginal tax rate of 35%, what is the after-tax, real rate of return? 4) How much will they require in today's dollar in order to meet their desired income stream over their planning horizon in today's 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. 5) How much will they require in today's dollar in order to provide a constant (that is, non-indexed) S60,000 after-tax per year for their planning horizon in today's 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 account. 6) Assuming there is a shortfall, what strategies can you recommend they can use to meet their proposed lifestyle expenditures during their retirement horizon?