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a. 2. Upon starting your new job after college, you've been confronted with selecting the investments for your 401(k) retirement plan. You have four choices
a. 2. Upon starting your new job after college, you've been confronted with selecting the investments for your 401(k) retirement plan. You have four choices for invest- ing your money: A money market fund that has historically returned about 1% per year. A long-term bond fund that has earned an average annual return of 4.5%. A conservative common-stock fund that has earned 6.5% per year. An aggressive common-stock fund that has earned 9.0% per year. If you were to contribute $5,500 per year for the next 35 years, how much would you accumulate in each of the above funds? b. Now, change your worksheet so that it allows for less than annual invest- ments (monthly, biweekly, etc.). The annual investment will be the same, but it will be made in smaller, more frequent, amounts. Set up a scenario analysis that shows your accumulated value in each fund if you were to invest quarterly, monthly, biweekly, and weekly. Create a sce- nario summary of your results. What relationship do you notice between the frequency of investment and the future value? Create a column chart of the results that more clearly shows the outcome from more frequently investing. C. a. 2. Upon starting your new job after college, you've been confronted with selecting the investments for your 401(k) retirement plan. You have four choices for invest- ing your money: A money market fund that has historically returned about 1% per year. A long-term bond fund that has earned an average annual return of 4.5%. A conservative common-stock fund that has earned 6.5% per year. An aggressive common-stock fund that has earned 9.0% per year. If you were to contribute $5,500 per year for the next 35 years, how much would you accumulate in each of the above funds? b. Now, change your worksheet so that it allows for less than annual invest- ments (monthly, biweekly, etc.). The annual investment will be the same, but it will be made in smaller, more frequent, amounts. Set up a scenario analysis that shows your accumulated value in each fund if you were to invest quarterly, monthly, biweekly, and weekly. Create a sce- nario summary of your results. What relationship do you notice between the frequency of investment and the future value? Create a column chart of the results that more clearly shows the outcome from more frequently investing. C
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