A$.$ Maureen and Todd were $25$ years old when they graduated from and began working at MGM Inc. Maureen started saving for retirement

immediately by investing $$300$ a month in MGM$\text{'}$s $401(k)$ that returned $9\mathrm{.}0\%$ a year on average until she retired at $65$ years of age.

Todd, however, did not begin saving until he was $35.$ At $35$ he began investing $$300$ a month in MGM$\text{'}$s $401($k$)$ until he was $65.$

How much did Maureen and Todd have in their $401(k)$ s when they retired at $65?$

B$.$ How much will Todd have to invest every month at the age of $35$ to have the same amount in his $401(k)$ as Maureen when he reaches $65?$

Case $2-$ Uncle Louis

Donald is the first person in his family to attend university. As an accounting major his relatives look to him for financial information and

guidance. During a recent family dinner, his Uncle Lous asked him the following questions.

Uncle Louis: My $8-$year$-$old grandson will be attending college in $10$ years. As a result, I just opened a savings for him and deposited $$7,000$ into

it$.$

A$.$ What will be the value of the account in $10$ years if the interest rate is $4\mathrm{.}0$ percent compounded annually?

B$.$ My brokerage firm offers two different savings accounts. The tax$-$free savings account provides a tax$-$free yield of $7\%,$ while the taxable

savings account provides a taxable yield of $9\mathrm{.}5\%.$ If I am in the $28\%$ marginal tax bracket, which account provides a better return on my

savings?

Case $3-$ Donald

The last two years of college have been financially difficult for Donald. It all started when he lost his part$-$time job. Because he had no income

and no emergency fund, he began using his credit cards to take cash advances and to pay for his daily living expenses. The day after graduation,

Donald will begin working for MGM Enterprises, where his annual salary will be $$51,000.$ His monthly take home pay $$2,975.$ With that

money, he plans to establish an emergency fund, pay off credit card debt of $$7,300,$ and start saving the money needed to begin an investment

program.

B$.$ What steps should Donald take to pay off his $$7,300$ of credit card debt?

C$.$ Donald has set a goal of saving and investing $$2,000$ per year. If his savings$/$investment earn $3\mathrm{.}0\%$ annually, how much will he have at the end

of five years?