2024 – Task Type Individual Project Deliverable Length Word document of 500 800 words with attached Excel spreadsheet

Task Type: Individual Project   Deliverable Length: Word document of 500–800 words with attached Excel spreadsheet showing calculations    
Points Possible: 150   Due Date: 1/19/2015 11:59:59 PM  CT [removed]     

Weekly tasks or assignments (Individual or Group Projects) will be due by Monday, and late submissions will be assigned a late penalty in accordance with the late penalty policy found in the syllabus. NOTE: All submission posting times are based on midnight Central Time.

Now that you have demonstrated a reasonable understanding of the time value of money concept, you will now have an opportunity to apply this knowledge to an extension of the previous tasks. In the Phase 1 IP, you calculated the estimated future costs of 3 lifestyles based on 3% inflation and the number of years until you reach age 67. In this task, you will complete the retirement plan that you started in the previous phase using the annuity concepts presented in this phase.

·       First, you will need to estimate the life expectancy of the retiree.

o   You use 90 years of age as an estimate.

·       Now you can subtract the life expectancy of the retiree from 67 (the retirement age), and use the first table below to calculate the required amount at retirement to support the following lifestyles adjusted for inflation (hint: the inflation adjusted amounts will be the payment as you will be calculating the present value of this annuity using a rate of return of 12%).

o   Basic: Current cost = $45,000

o   Comfortable: Current cost = $90,000

o   Luxury: Current cost = $150,000

·       Now, using the second table, you can calculate the annual contribution that needs to be made to have each required amount at retirement.

o   To determine the annual contribution, use the amount you calculated above as the future value, the market rate of return from Phase 1 as interest rate, and number of periods as 67 minus your current age.

FV of Life Style (PMT)	Given Expected Rate of Return (RATE)	Years in Retirement (NPER)	Required Value at Retirement  (Find PV of Annuity)
	12.0%	23
	12.0%	23
	12.0%	23

 

FV of Account (Use PV of Annuity from above)	5-Year Return on Top 500 Stocks (Rate)	Years to Retirement (NPER)	Annual Contribution Required to meet goal (Find PMT)

·       After completing the required calculations, explain your results in a Word document, and attach the spreadsheet showing your work.

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