You have just graduated USC and are starting you new job as financial analyst. Here are a few details:

• You are 25 years old and plan to retire at age 65
• Your starting salary is $60,000 per year
• You expect to receive annual increases of 3%
• Assume all 401k contributions are done once per year on January 1
• You have the following funds available to you in your 401k plan:
  1. Vanguard Total Stock Market Index VTSAX
  2. Vanguard Total International Stock VTIAX
  3. Vanguard Total Bond VBTLX
  4. Vanguard Total Global Bond VGCIX

Please answer the following questions:

1. Assume you contribute 10% of your salary every year. Assume you have an average annual investment return of 6.5%. What will be the balance in your 401k plan at age 65?