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This question was created from HW7_Sim_retirement planning_f16


can you please explain the C point? thanks


Lynn Price recently completed her MBA at DU and accepted a job with an electronics
manufacturing company. Although she likes her job, she is also looking forward to
retiring one day. To ensure that her retirement is comfortable, Lynn intends to invest
$3,750 of her salary into a tax-sheltered retirement fund at the end of each year, but she
expects each year's rate of return could be modeled approximately as a normal
distribution with a mean of 12.5% and standard deviation of 2%. Today is t=0, the first
deposit is made at t=0 and earns interest at t=1.
a. If Lynn is 30 years old, how much money should she expect to have in her
retirement fund at age 60? (Use 500 replications.)
b. Construct a 95% confidence interval for the average amount Lynn will have at
age 60.
c. What is the probability that Lynn will have more than $1 million in her retirement
fund when she reaches age 60?

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