On January 1, Bowie, just reached age 42, has come to you for help in planning his retirement. He works for a bank, where he earned $80,000 annually at the end of last year. It is assumed that his salary will grow by 3% per year and it is paid at the end of each year. Bowie would like to retire when he reaches 62 (20 years from today). He has consistently earned 6% of his investments annually. Assuming he is expected to live 20 years after retirement and he has an expected wage replacement ratio of 80%.

(d). Whats the present value of the retirement needs as of today? (show your work ).

(e). Whats the present value of his future earnings as of today?

N=, PMT=, i=%(keep two decimals), FV=, therefore, the present value of his future earnings as of today is (keep two decimals)

f). Based on the results in d) and e), whats his saving rate? (show work)