PART B (13 marks) 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, before tax in retirement to give her the lifestyle she wants. She will receive a non-indexed pension of $25,000 a year plus a combined $12,000 per year in CPP and OAS retirement income. She currently has $70,000 in her RRSP. For planning purposes, Marcia is using a 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. 4. What is Marcia's real rate of return before and after retirement? (ROUND TO 4 DECIMAL PLACES) (2 marks) real rate of returm = [(1 + nominal rete X (1-M7R)) = (1 + inflation rate)] -1 [(1 + 86.)/(1+ 27.)-1- 1.08 11.02) -1 = 0.0583235 or 5.8823% [(1 7677(1427)]-1- [11.06 / 1.02)]-1 = 0.039215 or 3.92157 What is the present value at retirement of her required retirement income of $50,000 per year, before tax? (2 marks) Pr=? n=25 lly = 5.8823 PMT= 50,000 FU=0 5. 6. What is the present value at retirement of her non-indexed pension? (2 marks) P 7. What is the present value at retirement of her CPP and OAS retirement income? (2 marks) PART B (13 marks) 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, before tax in retirement to give her the lifestyle she wants. She will receive a non-indexed pension of $25,000 a year plus a combined $12,000 per year in CPP and OAS retirement income. She currently has $70,000 in her RRSP. For planning purposes, Marcia is using a 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. 4. What is Marcia's real rate of return before and after retirement? (ROUND TO 4 DECIMAL PLACES) (2 marks) real rate of returm = [(1 + nominal rete X (1-M7R)) = (1 + inflation rate)] -1 [(1 + 86.)/(1+ 27.)-1- 1.08 11.02) -1 = 0.0583235 or 5.8823% [(1 7677(1427)]-1- [11.06 / 1.02)]-1 = 0.039215 or 3.92157 What is the present value at retirement of her required retirement income of $50,000 per year, before tax? (2 marks) Pr=? n=25 lly = 5.8823 PMT= 50,000 FU=0 5. 6. What is the present value at retirement of her non-indexed pension? (2 marks) P 7. What is the present value at retirement of her CPP and OAS retirement income? (2 marks)