$(20$ points$)$ Congratulations! Today is your ${20}^{th}$ birthday, but you are starting with nothing in the bank. You just started working full$-$time, earning $$50,000$ per year. Your goal is to have $$5$ million by your ${60}^{th}$ birthday $($i$.$e$.,40$ years from today$).$ Your employer offers a $)$ plan $($contributions by you are tax deductible, growth is tax deferred$),$ and within that plan you choose to invest in an extreme low cost S&P $500$ index mutual fund $($like ones offered by Schwab, Fidelity, Vanguard, etc$).$ The long$-$term expected return on the S&P $500$ index mutual fund is $10\%$ per year. Your employer pays you monthly.

$($a$)$ Ignoring taxes, if the employer offers no match on your contrlbutions, how much would you need to save every month to reach your goal?

$($b$)$ Ignoring taxes, if the employer offers a $10\%$ match on your contributions $($meaning if you put up to $10\%$ of your gross salary in$,$ they will match your investment amount, but if you put in $11\%$ they will only match $10\%),$ how much would you need to save every month on top of your match to reach your goal? $($c$)$ Assume your personal Federal marginal tax rate is $24\%$ and personal State of Arkansas marginal tax rate is $6\%.$ What is the answer to question $($b$)$ on an after$-$tax basis $($i$.$e$.,$ how much do you have to contribute every month after the employer match and net of tax savings$)?($Hint: contriburions to a

$401($k$)$ plan are tax deductible, grow tax deferred, but withdrawals are taxed as regular income when you take money out.$)$

$($d$)$ All of the above amounts are nominal. If your inflation expectation is $3\%$ per year, how much would you have to save every month after employer match, net of tax savings, and after accounting for inflation, to achieve a long$-$term goal of $$10$ million in today's $($real$)$ dollars by your ${65}^{ch}$ birthday? $($e$)$ Will your return likely be higher or lower than that offthe S&P $500,$ and why? $($Assume effectively zero expense fees with this low$-$cost indexed mutual fund and ignore taxes.$)$

$(20$ points$)$ You can buy or sell a $3\mathrm{.}5\%$ coupon $$1,000$ par U$.$S$.$ Treasury Note that matures in $6$ years.

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