1. After graduating from IU, you are hired by a company that offers a 401(k) retirement plan. You would like to save enough in this plan so that when you retire in 50 years you have an account balance of $2.8 million. You plan to make monthly contributions, and expect a real annual return of 6%, compounded monthly. How much should you deposit each month to reach your goal?
2. The company you work for is trying to decide between two projects. Project 1 costs $160,000 up front, and has an expected life of 4 years, over which it will return $52,000 each of the four years. Project 2 would last for 20 years, costs $1.5 million up front, and returns $170,000 at the end of each of the 20 years. Assuming a real discount rate of 6%, which project has the higher equivalent annual net benefit?