Marcia, age 56, is starting to think about retirement. She plans to retire at age 65 and she expects to liver to age 90. She estimates that she will need $50,000 per year, before tax in retirement to give her the lifestyle she wants. She will receive a non-indexed pension of $25,000 a year plus a combined $12,000 per year in CPP and OAS retirement income. She currently has $70,000 in her RRSP. For planning purposes, Marcia is using a 8% nominal rate of return on savings before retirement and a 6% nominal rate of return during retirement. Inflation is expected to remain at 2% per year throughout her lifetime.

4. What is Marcias real rate of return before and after retirement? (ROUND TO 4 DECIMAL

PLACES)

5. What is the present value at retirement of her required retirement income of $50,000 per

year, before tax?

6. What is the present value at retirement of her non-indexed pension?

7. What is the present value at retirement of her CPP and OAS retirement income?

8. Before she retires, Marcia decides that she will deposit $12,000 per year at the end of each year to her RRSP. How much will she have saved in her RRSP by the time she retires? Assume that Marcia will increase her annual deposit for inflation.

9. Based on your answers to the questions above, will Marcia have enough money for retirement? Explain.

Please show all calculations for all parts