Mr. and Mrs. Yung, both aged 48 and each with a life expectancy of 90, have a current annual
household income of $600,000 and current savings of $1.75 million. They would like to retire in
12 years time on 70% of their current income adjusted for inflation. They also wish to leave an
estate of $3 million to their only daughter, Tina, upon their deaths. The inflation rate is expected
to be 3% p.a. In order to achieve the Yungs’ objectives, how much capital should they accumulate at age 60 if the expected rate of return is 8% p.a.?