Peter is currently 30 years old and he plans to retire early, in 25 years time. He would like to have an income of $50,000 per year during his retirement, which he anticipates will last for 30 years. Assume that Peter receives the retirement income at the end of each of the 30 years.

Required:

Determine the amount of money Peter will need to have accumulated by the time he starts his retirement. Assume a discount rate of 9%.

The most common types of pension arrangements are defined contribution plans and defined benefit plans. Discuss each plan and how they differ.

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