Hanford MacDwaddy is 47 years old today and makes $78,000 per year. ?His wage replacement ratio has been determined to be 72%. ?He expects inflation will average 3.5%/year over his lifetime. ?He expects to earn 8% on his investments and he plans to retire at age 67. ?You have helped him determine his estimated social security retirement benefit at his full retirement age of 67 to be $18,000 per year (in today's dollars). ?Due to longevity in his family, he wants you to help him determine his capital needs for retirement assuming he lives to age 97.

Questions:

1. ?Calculate Hanford's capital needed at retirement at age 67 using the Pure Annuity, Capital Preservation and PPP models. ?You will have 3 separate solutions here. ?Remember we do this calculation in BEGIN mode since we need the money each year at the start of each year.

2. ?Calculate the monthly savings Hanford must make at the end of each month to accumulate the capital needed as identified in Question 1. ?You will have 3 separate solutions here as well

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Given Information Current Age Retirement Age: Mortality Age: Inflation Investment ROR: Current Salary: $ Wage Replacement: Social Security Estimate: 5 Calculations: Total Needs in Today's Dollars Less Social Seculty in Today's Dollars: Annual Amount Needed in Today's Dollars: JARR: 1st year need at retirement: Capital needed at retirement: Monthly savings to meet Capital Need: PA 1st year need at retirement: Capital needed at retirement: Monthly savings to meet Capital Need: CP 1st year need at retirement: Capital needed at retirement: Monthly savings to meet Capital Need: PPP 47 67 97 1st year need at retirement: Capital needed at retirement: Monthly savings to meet Capital Need: 3.50% 8.00% 78,000 72.00% 18,000 ****************>>>>Do Not Alter Anything Below This Roweeeeeeeeeeeeeeeee Total Needs in Today's Dollars: Less Social Secuity in Today's Dollars: Annual Amount Needed in Today's Dollars: JARR Pure Annuity #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A #N/A Models CP #N/A #N/A #N/A PPP Hints: These are the same for all three models These should be positive numbers and use BEG mode These should be negative numbers and use END mode