Answer:
Ron will need to supplement his monthly contribution by 137,65
Explanation:
We can use a financial calculator to solve thos issue.
First we need to determine his monthly contribution. Which is 5% of his monthly income which is 1571,12 x 5% =78,56 monthly contribution.
Secondly we need to determine the number of periods which he contributes.
35 x 12 (converting years into months) = 420 months
Now we will work out the future value of his contributions using a financial calculator. We will use the following keystrokes on the financial calculator PMT = 78,56 N = 420 I = 2,75%/12
COMP FV = 55375,45
required amount of capital = 1270x12x10 = 152400
Now we need to calculate the difference between the 2 amounts. 152400 - 55375,45 = 97024,55
Using a financial calculator again we can determine the monthly contribution. N = 420 I = 2,75%/12 FV = 97024,55 COMP PMT
COMP PMT = 137,65
Thus he will need to supplement his monthly contribution by 137,65 to get to the required amount of monthly income from 65 onwards. (answer may differ by a dollar or two due to rounding)
