When you retire in 40 years, you want to be able to endow a fund that pays a University $1,000,000 a year forever. You want to set up a savings plan now so that you save an equal amount each of the next 40 years (an annuity) to accumulate a large sum of money sometimes called a "Nest Egg". That money will then generate $1 Million of income every year forever. If the interest rate is 10% for all years:

a. What must your savings be in 40 years (the "nest egg") to generate $1,000,000 per year forever? Show the formula and math. Use a timeline

2019__________________________________________________2059____$1M_$1M_$1M__

Calculate the Nest Egg

b. What equal amount must you save each year for the next 40 years in order to generate the total savings you calculated in "a" above? Show the formula and the math to arrive at your solution.

2019__________________________________________________2059

for this problem, calculate the amount you must save each year until 2058 to build your "nest egg"