Peter Mller, a 40-year-old mechanic, plans to retire at age 65 and wants to accumulate 500,000 over

Peter Müller, a 40-year-old mechanic, plans to retire at age 65 and wants to accumulate €500,000 over the next 25 years to supplement the retirement programs provided by the German government and his employer Volkswagen. He expects to earn an average annual return of about 8% by investing in a low-risk portfolio containing about 25% short-term securities, 50% common stock and 25% bonds.
Peter currently has €44,300 that at an 8% annual rate of return will grow to about €150,000 by his 65th birthday. (The €150,000 figure is found using time value of money techniques, Chapter 4 appendix.) Peter consults a financial advisor to determine how much money he should save each year to meet his retirement savings objective. His advisor tells him that if he saves about €20.95 each year, he will accumulate €1,000 by age 65. Saving five times that amount each year, €104.75, allows Peter to accumulate roughly €5,000 by age 65.

a. How much additional money does Peter need to accumulate over time to reach his goal of €500,000?
b. How much must Peter save to accumulate the sum calculated in part a over the next 25 years?