What should be her savings rate each year

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Reference no: EM131606205

Lynn Rogers (who just turned 30) currently earns 60,000 per year. At the end of each calender year, she plans to invest 10% of her annual income in a tax defered retirement account. Lynn expects her salary to grow between 0% and 8% each year, following a descrete uniform distribution between these two rates. Based on historical market returns, she expects the tax deferred account to return between -5% and 20% in any given year, following a continuous uniform distribution between these two rates. Use N replications of a simulation model to answer each of the following questions.

a) What is the probability that Lynn will have excess of 1 million in her account when she turns 60?

b) If Lynn wants this probability to be over 95%, what should be her savings rate each year?

Reference no: EM131606205

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