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Problem 2. George More is a participant in a defined contribution pension plan that offers a fixed-income fund and a common stock fund as investment
Problem 2. George More is a participant in a defined contribution pension plan that offers a fixed-income fund and a common stock fund as investment choices. He is 40 years old and has $1,500 per year to each. He plans to retire at age 65, and his life expectancy is age 80. Assuming a 3% per year real earnings rate for the fixed-income fund and 6% per year for common stocks, what will be George's expected accumulation in each account at age 657 (10 points. Round your final answer to the nearest dollar amount.) a. What will be the expected real retirement annuity from each account, assuming these same real earnings rates? (20 points. Round your final answer to the nearest dollar amount.) b. If George wanted a retirement annuity of $30,000 per year from the fixed-income fund, by how much would he have to increase his annual contributions? (20 points. Round your final answer to the nearest dollar amount.) c
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