Maria and Anna, who are twins, just received $30,000 each for their 25^th birthday. They both have aspirations to become millionaires. So, they each invested the $30,000 into her early retirement fund. After this, they also each plans to make a $5,000 annual contribution to her retirement fund on her birthday, beginning a year from today. Maria opened an account with the Safety First Bond Fund, a mutual fund that invests in high-quality bond whose investors have earned 6% per year in the past. Anna invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average of 20% per year in the funds relatively short history.

1. If the two womens funds earn the same returns in the future as in the past, how old will each be when she becomes a millionaire?

2. How large would Marias annual contributions have to be for her to become a millionaire at the same age as Anna, assuming her expected returns are realized?

c. Is it rational or irrational for Maria to invest in the bond fund rather than in stocks?