Your Father,who Is 60,plans to Retire in 2 Years,and He

Multiple Choice

Your father,who is 60,plans to retire in 2 years,and he expects to live independently for 3 years.He wants a retirement income which has,in the first year,the same purchasing power as $40,000 has today.However,his retirement income will be of a fixed amount,so his real income will decline over time.His retirement income will start the day he retires,2 years from today,and he will receive a total of 3 retirement payments.Inflation is expected to be constant at 5 percent.Your father has $100,000 in savings now,and he can earn 8 percent on savings now and in the future.How much must he save each year,starting today,to meet his retirement goals?

A) $1,863
B) $2,034
C) $2,716
D) $5,350
E) $6,102