Please indicate what formulas were used to figure these calcuations.

Make the following assumption about a person and put calculations in a spreadsheet.

• Age is 40, retirement in 25 years.

• Salary is 100,000; growth rate per year is 4%.

• Interest rate is 10% (savings grow at 10%).

• A constant living standard is desired. • Inflation (CPI rate) is 3%.

• Estimated years of retirement is 20.

• To maintain standard of living during retirement, one requires 80% of non-retirement expenditure.

Instructions:

1. Calculate the stream of expenses possible with the assumed income (Hint: the PV of salary MUST EQUAL the PV of all expenses).

2. Develop a spreadsheet with clearly labeled material that is formatted to be printable on 1 page (clearly indicate the stream of salary, expenses during working life and expenses during retirement).

Please submit the spreadsheet for this scenario