smartpants

Now that I think about it, the notes they put for the Maclin case and the 2008 case don’t address inflation of the portfolio whatsoever.  The notes are not wrong–they just simply refer to the expenses/income rather than the tacking on of the inflation.
In the Maclin case, the note is just referring to why the annual salary and living expenses are not higher numbers.
In the 2008 case, the note is just referring to why the PMT function does not need any adjustment for living expenses–it’s because the salary covers it.
That’s all they are saying.  In other words, they are stating the obvious to us (that salary = expenses and the return objective does not need to be increased to account for living expenses).  And they are NOT making any reference whatsoever to the inflation rate that is to account for real portfolio growth, but that’s because it is unnecessary to add them in both places.
I think this is the answer to this problem and makes the 2007, two 2008, and Maclin returrn objectives agree.  Not bad for three hours of brain torture.