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, after-tax, in retirement to give her the lifestyle she wants. She will receive an indexed pension of $30,000 per year, before-tax. She will also receive a retirement pension of $700 per month from the Canada Pension Plan (CPP) and $600 per month in retirement income from the Old Age Security program. CPP and OAS payments are before-tax. She currently has $70,000 in her RRSP. For planning purposes, Marcia is using an 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. The tax rate applicable to Marcias situation is 25%.

1. In percentage terms (e.g. 3.2345%), what is Marcias real rate of return before and after retirement? (ROUND TO 4 DECIMAL PLACES) (3 marks)

2. What is the after-tax present value, at retirement, of her required retirement income of $50,000 per year? (3 marks)

3. What is the after-tax present value, at retirement, of her indexed pension? (2 marks)

4. What is the after-tax present value, at retirement, of her CPP retirement pension?(2 marks)

5. What is the after-tax present value, at retirement, of her OAS retirement income?(2 marks)

6. Before she retires, Marcia decides that she will deposit $1,000 per month at the end of each month to her RRSP. Including the current value of her RRSP, what will be the after-tax value of her RRSP by the time she reaches retirement age? (3 marks)

7. Based on your answers to the questions above, will Marcia have enough money for retirement? Explain. (2 marks)