How to calculate retirement investment
Part 1: Sarah Wiggum would like to make a single investment and have $2 million at the time of her retirement in 35 years. She has found a mutual fund that will earn 4% annually. How much will Sarah have to invest today? What if Sarah were a finance major and learned how to earn a 14% annual return? How soon could she then retire?
Part 2: Explain the relationship between present and future value. Use the terms compounding and discounting in your answer.