Hint: Annuity FV Silvia is a college graduate who today celebrates her 27 th birthday. She has not saved anything. Her motto has been money in, money out. Now, she sees family members and friends who after working all their lives have either retired or have been put out to pasture and are living in near poverty with Social Security as their only income. She has never taken a finance class and comes to you for help. She is thinking of contributing $1,000 (after-tax) per month to a an investment account and investing it in an S&P 500 index fund. She wants to know approximately how much she would have if she retired on her 55 th birthday, and how much if she retired on her 65 th birthday. You tell her that although the future actual rate of return is uncertain, based on the historical record an average annually compounded rate of return of about 11.5% on the S&P 500 is reasonable. Based on that rate of return, how much should her retirement account hold when she celebrates her 55 th birthday. How much if she works until her 65 th birthday? 1. At 55 she would have: 2. At 65 she would have: You tell her that an alternative is to contribute pre-tax dollars to a 401-k. If she is in the 20% tax bracket, what is the maximum monthly amount of pre-tax dollars that she could contribute to a 401-k, so that her after-tax income would be the same as if she contributed $1,000 after-tax to her personal investment account? 3. Pre-tax monthly contribution to a 401-k: Based on your answer to #2 how much would her retirement account hold when she celebrates her 65 th ? 4. At 65 she would have: Your numeric answers should be in the format: 1. 2. 3. 4.