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 $250,000 from her saving account on each birthday for 20 years following her retirement; the first withdrawal will be on her 66th birthday. Your friend intends to invest her money in a retirement account, which earns 8 percent return per year. She wants to make an equal annual deposit on each birthday into the account for her retirement fund. Assume that the annual return on the retirement account is 8 percent before retirement and 5 percent after retirement.

If she starts making these deposits on her 26th birthday and continue to make deposits until she is 65 (the last deposit will be on her 65th birthday and the total number of annual deposits is 40), what amount must she deposit annually to be able to make the desired withdrawals at retirement? (Hint: One way to solve for this problem is to first find the value on your friends 65th birthday of the $250,000 withdrawal per year for 20 years after her retirement using the annual return after retirement and then find the equal annual deposit that she needs to make from her 26th birthday to 65th birthday using the annual return before retirement.) Ignore taxes and transaction costs for the problem.