Question 4 Retirement (15 pts) (Please use the tables in the Time value of Money Appendix from the textbook for your calculations. Show your calculations clearly. Do not use Excel or websites such as Moneychimp.com. If you are not sure about the approach to use, make a posting to the Course topics board or send me an email and I can steer you in the right direction.)

a. Assume that the rate of inflation in the future will be 4%. Jack would like to retire at age 65 (in 25 years). For this calculation, assume that their total monthly expenses in todays dollars are $5000 (ignore the detailed expenses listed at the beginning of the case), how much will their expenses grow to in 25 years? Show your calculations clearly

b. Jacks total retirement savings today are $40,000 (assume he is saving only in his 401k for retirement). Based on the $12,000 he plans to add to his 401k each year, how much will it grow to in 25 years? Assume that he will obtain a rate of return of 7% per year. Show your calculations clearly

c. A Financial Planner advised Jack that he would need $2 Million in his 401k to be assured of a comfortable retirement. How much would Jack need to invest (in total, including the $12,000 per year that he plans upon putting in) in his 401k each year, for the next 25 years, to grow the account from its current value of $40,000 to $2 M at age 65? Assume that he will obtain a rate of return of 7% per year. Show your calculations clearly