9. (10 points) You plan to retire in 30 years. You plan on saving $20,000 in real dollars annually, starting at the end of this year, for the next 30 years. You expect to live 35 years during retirement (the first retirement payment will be 31 years from today). You expect to need to spend $30,000 a year (in real dollars) for four years starting 10 years from today to pay for college tuition for your son and these payments must be paid out of your retirement savings. If the fair nominal rate of interest is 6.6%, and you expect that inflation will average 2.5% for the next 65 years, how much will you be able to spend annually during retirement in real dollars?
Diagram the cash flows on a timeline below and calculate the values requested in the boxes provided.
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