Mr. William Poirot has come to you for advice on his retirement planning. He is 45 years old, and has $ 100,000 in his savings account. He also expects to receive an additional $80,000, after taxes, in ten years, when he sells his house. He plans to work for 20 years more, and expects to save $ 10,000 a year for the next 10 years, and $ 15,000 a year for the following 10 years.

a. Assuming that he earns 5% on both his current and future savings, how much should he expect to have in savings, when he retires in 20 years? ( 2 points)

b. If Mr. Poirot plans to withdraw the money in equal annual installments over the 15 years following his retirement, how much can each withdrawal be? (Assume that the interest rate continues to be 5% after the twentieth year.) ( 1 point)

c. How would your answer to (a) change if interest rates are expected to rise to 6% after ten years?