Mr. Jones is contemplating retirement. He has just celebrated his 50.00 birthday and his net worth is $1.50 million. He hopes that after retirement he can maintain a lifestyle that costs him $110000.00 per year in today's dollars (i.e., real dollars, inflation adjusted). For simplicity, assume that all expenses occur at the end of each year; the first expense of $110000.00 will happen one year from now. If he retires, he will invest all his net worth in government bonds that yield a safe nominal annual return of 4.50%. Inflation is expected to be 2.50% per year.

(a1) If Mr. Jones lives until he is 80, what is the present value of his living expenses?

(b1) If Mr. Jones lives until he is 100, what is the present value of his living expenses?