Answer:
Part B)
Given
Inflation rate i=6%
Nominal Interest rate =10%
accumulated saving P=3.5 millions
n=15 years
Real Interest Rate r=Nominal interest rate-inflation rate=10%-6%=4%
So Real Annual Expenditure =P*r/{(1-(1+r)^-n}=
Real Annual Expenditure=3500000*4%/{1-(1+4%)^-15)=$314793.85
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