Ms$.$ Reti Rement is currently $35$ years old and has an annual income of R$850000$

from her small business. She figures her income will grow by $6,5\%$ per year for the

$9$

next $30$ years, by which time she plans to retire. She does not belong to a pension or

provident fund.

$12\mathrm{.}1$ What will her final income at retirement be$?$

$12\mathrm{.}2$ Once Reti has retired, she reckons she will only need $80\%$ of her final income to

live comfortably. Although one cannot predict these things, Reti has looked up

life insurance statistics and found that her life expectancy is $86$ years. What

capital amount will Reti need to invest at retirement to provide for her remaining

years if the growth rate on the capital is $8,0\%$ per annum? Assume inflation will

be $4,5\%$ per year. How does this number compare to the rule of thumb provided

in the lectures? Comment on the difference, if any.

$12\mathrm{.}3$ If Reti only starts saving now, how much should she put away each month to

ensure the required capital amount at retirement, assuming a growth rate of $9\%$

per annum? Do you think Reti will be able to afford the required monthly

saving?

$12\mathrm{.}4$ If Reti started saving when she was $25,$ how much should she then have put

away per month until retirement? What is your conclusion from this?

If you use Excel to solve this problem, submit your file with your assignment.