6. Ruby is 25 and has a good job at a biotechnology company. She currently has $10,000 in an IRA, an important part of her retirement nest egg. She believes her IRA will grow at an annual rate of 8 percent, and she plans to leave it untouched until she retires at age 65. Ruby estimates that she will need

$875,000 in her total retirement nest egg by the time she is 65 in order to have retirement income of

$20,000 a year (she expects that Social Security will pay her an additional $15,000 a year). (LO14.2)

a. How much will Ruby’s IRA be worth when she needs to start withdrawing money from it when she retires? (Hint: Use Exhibit 1–A in the Chapter 1 Appendix.)

b. How much money will she have to accumulate in her company’s 401(k) plan over the next 40 years in order to reach her retirement income goal?