On her 25th birthday, a young woman engineer decides to start saving toward building up a retirement fund that pays 8% interest compounded quarterly (the market interest rate). She feels that $1,000,000 worth of dollars will be adequate to see her through her sunset years after her 65th birthday. Assume a general inflation rate of 6% per year.
(a) If she plans to save by making 160 equal quarterly deposits, what should be amount of her quarterly deposit in actual dollars? Assume the first deposit is made at the end of first quarter.
(b) If she plans to save by making end-of-the-year deposits, increasing by $1,000 over each subsequent year, how much would her first deposit be in actual dollars?