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Question 2 (10 points) Tyler and Liam, who are twins, just received $50,000 each for their 22nd birthday. They both have aspirations to become millionaires.
Question 2 (10 points) Tyler and Liam, who are twins, just received $50,000 each for their 22nd birthday. They both have aspirations to become millionaires. So, they each invested the $50,000 into her "early retirement fund. After this, they also each plans to make a $7,000 annual contribution to her retirement fund on her birthday, beginning a year from today. Tyler opened an account with the Safety-First Bond Fund, a mutual fund that invests in high-quality bond whose investors have earned 4% per year in the past. Liam invested in the New Issue Bio-Tech Fund, which invests in small, newly issued bio-tech stocks and whose investors have earned an average of 18% per year in the fund's relatively short history. a) If the two women's funds earn the same returns in the future as in the past, how old will each be when she becomes a millionaire? b) How large would Tyler's annual contributions have to be for her to become a millionaire at the same age as Liam, assuming her expected returns are realized? c) Is it rational or irrational for Tyler to invest in the bond fund rather than in stocks
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