Assume you are the chief financial officer for a small manufacturer near the border. The owner of the business wants to retire soon and hand the company over to the employees. First, she wants to know how much money she needs to accumulate in her 401k retirement plan, in order to receive an annual payment for her life expectancy. Assume that she has told you that she needs $70,000 per year (in addition to her social security benefits) to live in the lifestyle to which she has become accustomed. She will retire when she reaches age 66. You will need to make some assumptions about the average earnings of her portfolio (interest rate). She has indicated that she will only invest in low-risk securities such as high quality bonds or U.S. treasury notes.

How much money must she accumulate in order to withdraw $70,000 per year for the remainder of her life expectancy? State your assumptions and show your calculations.