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487 a 25yearold engineer is opening an individual retirement account...

Question: 487 a 25yearold engineer is opening an individual retirement account...

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4-87 A 25-year-old engineer is opening an individual retirement account (IRA) at a bank. Her goal is to accumulate $1 million in the account by the time she retires from work in 40 years. The bank manager estimates she may expect to receive 6% nominal annual interest, compounded quarterly, throughout the 40 years. The engineer believes her income will increase at a 5% annual rate during her career. She wishes to start her IRA with as low a deposit as pos- sible and increase it at a 5% rate each year. Assuming end-of-year deposits, how much should she deposit the first year?

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