Question: Mr. Palmer wants to retire in 20 years and purchase a 25-year annuity that will make end-of-quarter payments. The payment size is to be the

Mr. Palmer wants to retire in 20 years and purchase a 25-year annuity that will make end-of-quarter payments. The payment size is to be the amount which, 20 years from now, has the purchasing power of $6000 today. If he already has $54,000 in his RRSP, what semiannual contributions must he make for the next 20 years to achieve his retirement goal? Assume that the annual rate of inflation for the next 20 years will be 2.5%, the RRSP will earn 8% compounded semiannually, and the rate of return on the fund from which the annuity is paid will be 5.6% compounded quarterly.

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