You plan to retire a millionaire on Sept. 28 2035. Today Sept. 28 2011 you make the first of 25 annual deposits into your retirement acct, the last deposit will be on Sept 28, 2035. You decide that you are willing to assume a bit of risk in the hope of receiving a higher return. Therefore, you place half of your annual deposit into a fixed interest rate fund, earning 4 % annually, and half of your annual deposit into a stock fund.
A. if the stock fund also returns 4% annually, how large will your deposits need to be?
B. If the stock fund returns 7.5% annually how large will your deposits need to be?(remember , you are placing the same amount into both the fixed and the stock fund, therefore the accts will not have values of 500k each at the end in yr 2035. Clearly the stock fund will have a larger sum than the fixed interest fund)