1) Mrs. Beach wants to invest a lump sum of money today to have $100,000 when she retires at 65 (she is 40 today).
a. How much of a deposit would she have to make if the interest rate on the C.D. was 5%?
b. What would Mrs. Beach have to deposit is she were to use high quality corporate bonds an earned an average rate of return 7%?
c. What would Mrs. Beach have to deposit if she were to use common stock and earned an average rate of return of 11%?
d. What type of problem is this?