Megan, an unmarried 55 year old school teacher, wants you to manage her nest egg which consists of $500,000 in savings. This sum is in several savings accounts at local banks. Megan loves teaching and wishes to retire at age 70. She believes she will follow the lead of her mother who was 90 when she passed away. She will be perfectly happy with a modest retirement income of $60,000 per year(from her future portfolio), supplemented by her Social Security, projected to be about $15,000 per year. She has expressed a wish to leave $1,000,000(adjusted for future inflation)of money to her niece when she passes away. She does worry a bit, though, about inflation. She can probably manage to save another $5,000 per year until she retires.

a. Calculate and explain what would be Megan's ROI (TVM)?

b. How do you design her portfolio to accommodate her tax liabilities?