Your friend is celebrating her 25th birthday today and wants to start saving for her anticipated retirement at age 65. She wants to be able to withdraw RM 50,000 from her savings account on each birthday for 20 years following her retirement; the first withdrawal will be on her 67th birthday. Your friend intends to invest her money in a local credit union, which offers 6 percent interest per year. She wants to make an equal annual payment on each birthday into the account established at the credit union for her retirement fund.

a) If she starts making these deposits on her 28th birthday and continue to make deposits until she is 65 (the last deposit will be on her 65th birthday), what amount must she deposit annually to be able to make the desired withdrawals at retirement?

b) Suppose your friend has just inherited a large sum of money. Rather than making equal annual payments, she has decided to make one lump-sum payment on her 25th birthday to cover her retirement needs. What amount does she have to deposit?

c) Suppose your friends employer will contribute RM 2,300 to the account every year as part of the companys profit-sharing plan. In addition, your friend expects a RM 13,500 distribution from a family trust fund on her 45th birthday, which she will also put into the retirement account. What amount must she deposit annually now to be able to make the desired withdrawals at retirement?

d) What happens to future value if you increase the rate of return?