Question

Chelsea will retire in fifteen years. Once she is retired, she will live for 20 years...

Chelsea will retire in fifteen years. Once she is retired, she will live for 20 years and need 50,000 per year to cover her expenses (from the end of year 16 through 35). When she retires in 15 years, she will sell her house for 800,000 and buy a condominium for 600,000. She currently has 60,000 in savings and the discount rate is 3%.

A) Between the end of this year and the end of year 15, how much does Chelsea need to save to afford her retirement? (Take into account her savings and all cash flows)

B) What if Chelsea cannot save anything until the end of year 5? Holding all else the same, how much would Chelsea have to save between the end of year 6 and end of year 15 to afford retirement?

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