StefaniGerman,a40-year-oldwoman, plans to retire at age65,and she wants to accumulate$500,000over the next25years to supplement the retirement programs that are being funded by the federal government and her employer. She expects to earn an average annual return of about 5%by investing in alow-riskportfolio containing about20%short-termsecurities,30%commonstock,and50%bonds.

Stefani currently has$44,300 that at an annual rate of return of 5%will grow to about$150,000by her 65th birthday.Stefani consults a financial advisor to determine how much money she should should save each year to meet her retirement savings objective. The advisor tells Stefani that if she saves about$20.95 eachyear,she will accumulate$1,000by age 65. Saving five times that amount eachyear,$104.75allows Stefani to accumulate roughly$5,000by age 65.

a.How much additional money does Stefani need to accumulate over time to reach her goal of$500,000?

b.How much must Stefani save to accumulate the sum calculated in parta.over the next25years?