Your friend is celebrating her 24th birthday today and wants to start saving for her anticipated retirement at age 63. 1

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Your friend is celebrating her 24th birthday today and wants tostart saving for her anticipated retirement at age 63. 1. Sheestimates that the annual spending needs would be $290,000 based onthe current price level, and the inflation rate is expected to be3% per year. 2. She wants to be able to make withdrawals forspending needs each year for 28 years following her retirement; thefirst withdrawal will be on her 64th birthday. 3. She expects toreceive $6,500,000 inheritance on her 74th birthday. 4. She intendsto invest her money in a conservative fund, which offers6.7 percent interest per year after retirement. 5. Beforeretirement, your friend invests in stock funds, which offer (7 +0.3 x Y) % interest per year. 6. She decides to buy a $6,000,000apartment. Her parents will pay 40% down payment for her home. Shewill pay an annual mortgage for 25 years at 3% mortgage rate,starting from her 34th birthday. 7. She will get a $390,000 annualsalary in her 25th birthday, and the salary is expected to increaseby 8%. The last salary will be paid on her 63rd birthday. 8. If shestarts making these deposits on her 25th birthday. What proportionof salary should she save each year?
a. Expected annual consumption needs on 64th birthday.
b. Present value of all retirement consumption needs (value ather 24th birthday).
c. Present value of the inheritance (value at her 24thbirthday).
d. Present value of all mortgage payments (value at her 24thbirthday).
e. Annual savings need as a percentage of her salary.
f. What is her balance on her 70th birthday (after paying theretirement needs on that date)?