Your sister is celebrating her 32nd birthday. As the party winds down she asks for your assistance in helping her plan for retirements because she knows that you are taking a finance course in your MBA program. She wants to start saving now for retirement at age 62. She tells you that ideally she would like to withdraw $50,000 on an annual basis for at least 20 years starting the year after she retires at age 62. She says that she would be comfortable putting aside some money each year in an annuity and believes that she should be able to earn an 8% rate of return.

A.) If your sister starts making annuity payments to her savings account at the end of this year and makes her last deposit at age 62, how much must she deposit each year?

B.) Your sister mentions that she already has a savings account of $25,000. If she used that money to start the retirement account, how much must she deposit each year until she reaches age 62?

C.) She suddenly remembers that as children your parents bought both you and her a life insurance policy that matures on her 50th birthday for an amount of $50,000.If she added that to the retirement fund, along with her $25,000 (year 0) savings account, how much must she deposit each year until she reaches age 62?