Question
You and your cousin Kristin were born on the same day. Today is your 25th birthday. Five years ago (when you turned 20) your aunt
You and your cousin Kristin were born on the same day. Today is your 25th birthday. Five years ago (when you turned 20) your aunt started depositing $2,500 into Kristin's account. She did this every year and she just made a sixth deposit. Your aunt will make forty more $2,500 payments until a 46th and final payment is made on Kristin's sixty fifth birthday. Your aunt has had a change of heart and now wants to make an equivalent provision for you. She will make the first payment to your account today. She plans to make forty additional (and equal) annual payments until you too turn sixty five, when the forty first and final payment will be made. If both accounts earn an annual return of 8 percent, how much must your aunt put into your account today and the next 40 years to enable you to have the same retirement fund as Kristin after the last payment is made on your sixty fifth birthday?
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