Question 1:

Janet is 35 years old who works in McKenesy and Caompany and planning to rresign in 25 years when she will be 60 years old and she will live until 105.

There are total of 45 payments will be made at the end of each year annually during her retirement.The first payment will be $150,000. She wants the annual payments to increase by 3% per year during retirement.

Also,Janet has pledged to donate $1500 a week to charity during her retirement and payments will be made at the end of each week. The last payment will be made when she dies.

In addition, she would like to establish a scholarship. The first payment from scholarship would be $120,000. The first scholarship payment would be made 10 year after she retires. Thereafter scholarship payments will be made every year. To keep pace with inflation, Janet would like the amount of scholarship payments to increase by 4% each year. She wants the payments to continue after her death, therefore the payments will go on forever.

Janet has two kids, sophia age 2 and Emon age 5.She plans on giving each child $1,500,000 when the child turns 40 years old.

During retirement, Janet expects to earn 6% per year compounded annually.

She currently has $50,000 in investment account A, that earns 6% interest per year compounded semi-annually. Janet currently contributes $1,500 every month to an investment account B. These contributions are made at the end of each month and will continue until she retires at 60. She expects to earn 8% per year compounded annually on her monthly contributions to her retirement account.

a) How much money does she need when she retires at the age of 60? include all her financial goals.

b) How much money will she have when she retires?

c) How much is she short? [Hint: that would be the difference between the amounts in parts (a) and (b)]

d) In order to finance any shortfall, Rachel will make weekly contributions into a new retirement account. This new retirement account will earn 7% per year compounded annually. The contributions will be made at the beginning of each week until she retires at 60. How much must she contribute each week to the new retirement account?