John Jacob just received a signing bonus of $525,000. His plan is to invest this payment in a fund that will earn 4%, compounded annually.

Instructions

(a) If Jacob plans to establish a charitable foundation once the fund grows to $1,000,000, how many years until he can establish the foundation?

(b) Instead of investing the entire $525,000, Lee invests $200,000 today and plans to make 6 equal annual investments into the fund beginning one year from today. What amount should the payments be if Jacob plans to establish the $1,000,000 foundation at the end of 6 years?