For chapter 5 complete questions #1a and #2. make sure if equations are used it can be typed in google docs.

Questions and Problems 1. Fred's company has a defined-benefit pension plan. Suppose the plan pays a benefit equal to 1% of final salary per year of service. Fred is 40 years old and has worked for the company for 15 years. His last year's salary was $50,000 and is expected to remain so in real terms until retirement. The expected rate of inflation is 4%. a. If normal retirement age is 65, the interest rate is 8%, and Fred's life expectancy is 80, what is the present value of his accrued pension benefit? b. What effect should his pension benefit have on Fred's planned saving, assuming he has a 75% target replacement rate? 2. Analyze the "expert's" responses to the following questions: Question: How early do you recommend people begin saving for retirement? Would it be too early for my 14-year-old to start saving? Expert: It's never too early. Question: For a college student, what would you suggest for a savings plan? Expert: I'd suggest deciding on a specific amount to set aside each month, then making sure you do it, no matter the temptations not to. 3. Analyze the following newspaper column: Many of us who started families late share a nightmare image: having to pay huge college bills just as we're giving up paychecks and shouldering the steep costs of