Bart and Lisa Simpson both work at the Springfield DMV and have decided to start saving for retirement, which is 40 years away. They’ll both receive a 7 percent annual return on their investment over the next 40 years. Lisa invests $4,500 per year at the end of each year only for the first 10 years of the 40-year period. Bart doesn’t start saving for 10 years and then saves $4,500 per year at the end of each year for the remaining period of time
1. How much will Lisa have when she retires? Note: this question requires you to do two sets of calculations. Do not round until the end.
2. How much will Bart have when he retires?
3. How much would Bart need to save each year if he wants to “catch-up” to Lisa (how much will he need to save so that he has the same amount at retirement as Lisa)?