Jim is 30 years old and plans to retire in 35 years at age 65. His retirement plan at work guarantees him $25,000 per year at the end of each year for the rest of his life starting retirement. However, Jim wants to spend $60,000 per year when he retired, and he would like to have the $60,000 at the beginning of the each year. Jim will be retired for 25 years. The only investment opportunity Jim has form age 30 to 65 is investment that has annual rate of return of 12% that is compounded quarterly. However, the only investment opportunity Jim has form age 65 to 90 is investment that has annual rate of return of 10% that is compounded annually.

a) Jim would like to save quarterly, how much Jim must deposit at the end of each three months for the next 35 years to be able to achieve his retirement goals. Diagram the relevant cash flows on a time line.

b) If Jim would like to take trip around the world at age of 72, the cost of the trip is 175,000. The cost of the trip must be paid at the beginning of year 72. How much must Jim deposit at the end of each three months for the next 35 years to be able to achieve his retirement goals and go on the trip. Diagram the relevant cash flows on a time line.

c) Jim will receive a $200,000 in 25 years from now; Jim plans use the money to achieve his retirement goals. Also his daughter will be attending college in 15 years and she needs $20,000 every six months for five years at the beginning of each six months to finish her college education (First payment is when Jim is 45 year old). For both the $200,000 and the college education, Jim could invest and/or borrow at 10% that is compounded semiannually. How much must Jim deposit at the end of each three months for the next 30 years to be able to achieve his retirement goals, go on the trip and pay for his daughter education.