Nicole is a 25 year old financial analyst with a large multinational company. She will deposit $525 per month in her retirement fund (for the next 40 years) and plans to retire at age 65.

a. How much will she have accumulated when she turns 65 years old if she invests in equities (stock) and earns 8.64% on average?

b. How much will she have accumulated when she turns 65 years old if she invests in fixed income securities (bonds) and earns 4.51% on average?

c. Her friend, Matthew, has been enjoying life but hasnt started saving for his retirement. He plans to start when he is 35 years old. How much will he have at age 65 assuming he invests $780 per month (for the next 30 years) in the same manner as Nicole in (a - stocks) and (b- bonds) above. (You need two answers for this question.)

d. What is causing the large difference in retirement savings (at age 65) between Nicole and Matthew?