Q: Imagine you are 30 years old, and would like to retire when you are 60 years old. On December 31^st of your 30^th year, you invest $10,000 in an investment brokerage account. With the $10,000, you buy 2 mutual funds. $5000 is invested in a stock mutual fund that is expected to return 7% per year, and $5000 in a Bond mutual fund that is expected to return 4% per year. Every subsequent year, on December 31^st, you continue to add $5000 to the IRA, of which $4000 goes into the stock mutual fund and $1000 goes into the bond mutual fund.

Assuming you get the returns anticipated, what will be the balance in the stock mutual fund after 30 years (i.e. right after the 30^th deposit. To avoid confusion, use the 30 year column from the Time Value of Money table)? (5 pts)

My Answer: $411,904.42

Assuming you get the returns anticipated, what will be the balance in the bond mutual fund after 30 years? (5 pts)

My Answer: $71,301.93

Given the above, what is the total balance in your account? Your goal is to accumulate $2 Million in this account by the time you retire. How much MORE will you need to contribute to the account (assume that the entire extra contribution will go into the stock mutual fund) each year to achieve this goal? (5 pts)

My Answer: Additional $16230 is required to be contributed.