Answered step by step
Verified Expert Solution
Question
1 Approved Answer
- 4 0 1 K project ( please use Excel and provide screenshots of formulas ) Use the following assumptions: Starting salary = $ 7
K project please use Excel and provide screenshots of formulas
Use the following assumptions:
Starting salary $
Nominal salary annual growth rate note this is a change
Employer matching of salary
Investing period years age to
Capital Markets Expectations CME:
Estimated equity market returns
Estimated bond market returns
returns
Questions: to make it easier, the answers are provided for each question. Figure out how to solve for them in Excel
Solve for the required pretax savings rate for success Success is based on standard financial planning theory that you need to have x your final salary at retirement to not outlive your savings.
prettax savings rate
Calculate in $ terms the cost of waiting years to begin investing in your k ie how expensive is being disorganized? Hint: your salary will have grown during the years you delayed getting your act together.
$ $ for waiting years
Calculate the $ value of not focusing on fees, expenses and managing behavioral finance issues. To calculate this use the differential between the average investor returns and the actual performance: What critical financial concept is at play here?
$ $ from not listening to advice
Calculate the $ value differefntial of using a glidepath strategy instead of a fixed allocation. For the glidepath assume the heuristic: your year equity allocation and reducing per year for years. This will require you to calculate a new rate of return assumption using our equity and bond CME estimates every year
$ $ difference
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started