You are 50. You plan to take early retirement in 8 years. You can save $6,000 per year at the end of each of the next four years and earn 6% compounded annually, and $20,000 at the end of each of the following four years and also earn 6%. You currently own $300,000 in land, which you expect to appreciate at 5% per year.

a. Upon retirement, what will your net worth be (assuming you owe nothing)? [3 marks]

b. You expect to live 30 years past retirement and plan to leave your children an estate of $150,000 (after these 30 years). You project interest rates to be 7% compounded annually. Given the retirement plan described at the beginning of this problem and the estate that you intend to leave for your children, how much can you withdraw at the end of each year to finance your retirement ? [4 mark