Prof. Business wants to retire in 5 years and is looking at what needs to be added to their retirement account based on the following assumptions and wants.

• Business wants a 20-year retirement annuity that begins 5 years from today with an equal annual payment equal to $90,000 today inflated at 3% annually over 5 years. Her first retirement annuity payment would occur 5 years from today. She realizes her purchasing power will decrease over time during retirement.
• Business currently has $960,000 in her University retirement account. She expects these savings and any future deposits into her University and any other retirement account will earn 7% compounded annually. Also, she expects to earn 4% annual return after she retires.

Answer the following questions to help Prof. Business finalize her retirement planning.

1. What is Prof. Business desired annual retirement income which begins in 5 years?
2. How much will Prof. Business need 5 years from today to fund her desired retirement annuity assuming the 4% post-retirement expected annual return?
3. In addition to the $960,000 balance today, Prof. Business will fund her future retirement goal from question 2 by making 5 annual equal deposits at 7% compounded annually into her retirement accounts starting a year from today (the last deposit will be made when Prof. Business retires). How large does this annual deposit need to be in addition to the initial $960,000 invested in Prof. Business retirement fund?

4. This annual figure from #3 is slightly more than the Prof.s current annual contribution. Business annual retirement account contribution is based on a percentage of her salary and will increase as her salary increases. That said, lets re-plan her retirement income based on her projected required contributions alone. Lets account for the fact that her and the Universitys contributions to Prof. Business University retirement plan are based on a certain percentage of her salary and will increase as her salary increases. Based on this formula, her first upcoming end of the year deposit will be $18,250 and lets assume that her annual deposit and salary will grow at a 2% annual rate over the remaining 4 years (5 total deposits) to Prof. Business retirement. These deposits are in addition to the $960,000 she currently has today in the University retirement plan. Answer the following based on these assumptions.
   1. How much money will Prof. Business have in her retirement account immediately after her last deposit 5 years from today?
   2. What would be the equal annual payment from her 20-year retirement annuity whose first payment occurs exactly 5 years from today?
5. Business now wants to consider retiring two years earlier in 3 years and will deposit her required University contributions each year as in question 4 and will deposit and additional $15,000 at the end of each year for the next 3 years (first deposit totals $33,250). Also, she will require a 22-year retirement annuity.
   1. How much money will Prof. Business have in her retirement account immediately after her last deposit 3 years from today?
   2. What would be the equal annual payment from her 22-year retirement annuity whose first payment occurs exactly 3 years from today?
   3. What would be the equal annual payment from a 20-year retirement annuity whose first payment occurs exactly 3 years from today?