3. (TCO A) The following questions are worth 5 points each. Please show all work.

Question

a. Inflation is expected to average five percent for the long term and Mr. Smith earned $74,000 this year, how much must he earn in 20 years just to keep up with inflation and maintain the balance between his income and his increasing expenditures?

74000*2.653=196,322

b. Jamie wants to have $2,000,000 for her retirement in 35 years. How much should she save annually if she thinks she can earn eight percent on her investments?

2000000*.094=

c. The Flemings will need $160,000 annually for 30 years during retirement. How much will they need at retirement if they can earn a four percent rate of return?

d. The Hamptons want to have $2,500,000 for their retirement in 30 years. How much should they save annually if they think they can earn seven percent on their investments?