Get your original paper written from scratch starting at just $10 per page with a plagiarism report and free revisions included!
. George More is a participant in a defined contribution pension plan that offers a fixedincome fund and a common stock fund as investment choices. He is 40 years old and has an accumulation of $100,000 in each of the funds. He currently contributes $1,500 per year to each. He plans to retire at age 65, and his life expectancy is age 80.
a. Assuming a 3% per year real earnings rate for the fixed-income fund and 6% per year for common stocks, what will be George’s expected accumulation in each account at age 65?
b. What will be the expected real retirement annuity from each account, assuming these same real earnings rates?
c. If George wanted a retirement annuity of $30,000 per year from the fixed-incomefund, by how much would he have to increase his annual contributions?