You have just been hired as a financial adviser at white Securities. Your first client Robert Kane, seeks your advice for his retirement plan. Robert wants to retire 20 years from now with an income of $25,000 per month for 10 years with the first payment received 20 years and 1 month from today. Robert also likes to purchase a car 8 years from today with an estimated cost of $120,000. He would also want to leave $2,000,000 as a bequest to his former High School after he passes on at the end of 10 years of withdrawals.

Robert can afford to save $5,000 per month for the next 8 years and he expects to earn an EAR of 8% before he retires and an EAR of 10% after he retires.

a. Draw the timeline for this problem.

b. What is the monthly rate of compounding/discounting before Roberts retirement? After

retirement?

c. How much money does Robert need to accumulate by the time he retires?

d. How much money will Robert have after he pays for the car 8 years from today?

e. How much does Robert need to save each month starting from a month after he pays for the car,

up until he retires?