Option 2: He can use part of the inheritance to complete an MBA program. It will take Sam 2 years to complete the MBA program (assume that if he decides to pursue the MBA program, he will start the program today). The total cost of the program will be $40,000. Jeff will pay the total cost of the program at the beginning of the program (i.e., today). He will invest the rest of the inheritance in the risk-free fund. The yearly interest rate that he will receive is 4% (compounded annually). Jeff expects that after he finishes the MBA program, he will receive a promotion at TFH Inc. within a year, and his new salary will be $60,000 (he will receive $60,000 during year three). Jeff expects that this salary will grow at a rate of 4% per year. Once Jeffs salary becomes $60,000, he will save 6% of his salary, and deposit it in the mutual fund every year. He expects to earn a return of 6% per year on this investment (compounded on a yearly basis). He will make the first deposit three years from today. He will make his last deposit when he is 65 years old.

1. If he Chooses option 2, how much money will he have in his savings when he retires at the age of 65?