Suppose Dr Amy Smith requires $50,000 per annum to retain his current standard of living. Amy is currently 60 years old and will retire at age 70.

Suppose Dr Amy Smith requires $50,000 per annum to retain his current standard of living. Amy is

currently 60 years old and will retire at age 70. Upon retirement, Amy will rely solely on his savings

and have no other sources of alternative income. Amy’s current income is $70,000 per annum and is

expected to remain at this level for the next 10 years.

The value of his current investments and saving is $475,000. Assume that there are no taxes.

Required:

1. Using the information provided above, determine an appropriate level of return for the preretirement

period.

2. Please discuss/show why this level of return would be appropriate for Amy.