A 27-year old engineer plans to retire at age 62 and wishes to begin investing monthly in a 401(k) retirement account which has a current balance of $10,000. She projects that her 401(k) will yield an annual rate of 6% and her salary will average $150,000 over her 35-year career. If the earnings on investment is compounded monthly and disregarding inflation, how much should she invest* monthly to have $1,000,000 (Future Value) in her 401(k) account when she retires? Also, express the annual contribution as a percentage of her average annual salary.

* With so many variables, there is no way to calculate a specific monthly amount; therefore, you may calculate an annual contribution and divide the

amount by 12 to get the approximate monthly amount.

Hint: Start by drawing a cash flow diagram.