Mike is 35 years old and he is planning to retire in 25 years. He expects to live 20 more years when he retires. He figures he would need $50,000 a year to live his life style after retirement.

a. How much money will mike need at retirement assume 6% interest rate.

b. Assume more is planning a lump sum investment today with 6% interest rate to arrive at the figure in (a). How much is the lump sum?

c. Instead of a lump sum investment, Mike is planning a yearly investment. Still assume 6% interest rate, how much is the yearly investment in order to arrive at the amount in (a).?

d. Now, assume the interest rate is 2%, re-do (b) and (c). Compare to (b) and (c), what do you find?