3. Similar to a case discussed in one of our recent classes, Mary Johnson of Boston, MA, plans to invest.$3,500 each year in a mutual fund for the next 35 years to accumulate savings for her retirement. Her brother Michael also plans to invest the same amount for the same length of time in the same mutual fund. However, instead of investing with after tax money, Michael will invest through his employers sponsored tax-sheltered retirement plan. If both mutual fund accounts provide an 8% annual rate of return.

• How much more than Mary will Michael have in his retirement account after 35 years?

• How much will Michael have if he should also invest the amount saved in income taxes? Assume both Mary and Michael pay income taxes at a 25% rate.