Case Information

Part I:

Businesses hire cash managers to invest their cash/profits on a daily basis. Suppose you are an entrepreneur who wants to invest some its companys profits each month into an account for 10 years. The accumulation of funds will be used to finance the companys capital projects or for funding a purchase or merger of another company. In other words, the company would self-finance its capital activities after ten years of saving/investing.

Using Dave Ramseys mutual fund investing philosophy, you will select one mutual fund from four different mutual fund categories: Large cap, mid cap, small cap, and foreign/global/international.

Your will use the following link for selecting the mutual funds:

Go to yahoo.com and click on finance; then follow the instructions on the guidance document.

You will be investing $5,000 per month for each of the mutual funds over a 10 year period based on their 10 year annualized return for each fund. You will then calculate the projected value of the fund by using the following Bankrate.com link: http://www.bankrate.com/calculators/savings/simple-savings-calculator.aspx?MSA=

Be sure to change the initial investment on the bankrate calculator from $10,000 to just $1 for your calculation!

Next you will complete the following chart:

Complete the chart below:

CATEGORY	*MUTUAL FUND NAME	AMOUNT INVESTED PER MONTH	NUMBER OF YEARS TO INVEST	**Use the 10 year annualized return for the Fund from the yahoo.finance site	***PROJECTED VALUE OF FUND-from Bankrate.com
LARGE CAP	1.	$5,000	10	%	$
MID CAP	1.	$5,000	10	%	$
SMALL CAP	1.	$5,000	10	%	$
FOREIGN	1.	$5,000	10	%	$
	TOTAL VALUE FROM ALL INVESTMENTS	$20,000			$

*Insert name of each mutual fund selected for each category.

**Use the 10 year annualized return for the fund.

***The projected value for each mutual is required. Documentation supporting each projected value is required to be attached at the end of the written paper under the title: SUPPORTING DOCUMENTATION. The information should appear in the same order from the chart.

Requirements for each mutual fund selected from the Morningstar link:

• Select a mutual fund
• What is the 10 year rate of return found in the Performance section under the line entitled Fund, review the risk and return ratings for this mutual fund and provide a comment?
• What is the expense percentage for this mutual fund found towards the top of the fund page? Provide a comment?
• List the top 5 holdings of the fund found towards the bottom of the fund page.

You are to comment on the following:

• What is your response to the total return amount from your investments?
• As a future manager, describe how you would manage this fund into the future (after the 10 year investing period). Suppose you would draw about 6% interest from the fund to be used for business activities (again, after the 10 year investing period), please comment on the 6% withdrawal on this interest earnings from the investment.
• Using this investment strategy, how does it change your business outlook for future growth of your business?
• Discuss the possible impact of self-financing on the balance sheet and income statement. Also comment on how self-financing can affect decision making. (Note: self-financing for this example would be the funding provided from the interest earned after the 10 year investing period.)
• Your final comments about Part I of the assignment.

Part II:

This part of the case involves projecting your future wealth accumulation based on saving 15% of your annual gross salary for forty years.

You will select one mutual fund from each of the four mutual fund categories as you did in Part I. You may use the same selections from above or choose other funds.

Requirements:

• Projected Job Name:
• Projected Starting Salary:
• 15% of your salary:
• Monthly amount to be invested (divide your 15% result by 12):
• Amount to be invested in each fund (divide the monthly amount by 4):
• Complete the chart

Complete the chart below:

CATEGORY	*MUTUAL FUND NAME	AMOUNT INVESTED PER MONTH	NUMBER OF YEARS TO INVEST	**Use the 10 year annualized return for the fund	***PROJECTED VALUE OF FUND
LARGE CAP	1.	$0	40	%	$
MID CAP	1.	$0	40	%	$
SMALL CAP	1.	$0	40	%	$
FOREIGN	1.	$0	40	%	$
	TOTAL VALUE FROM ALL INVESTMENTS				$

*Insert name of each mutual fund selected for each category.

**Use the 10 year annualized return for the fund.

***The projected value for each mutual is required. Documentation supporting each projected value is required to be attached at the end of the written paper under the title: SUPPORTING DOCUMENTATION. The information should appear in the same order from the chart.

Requirements for each mutual fund selected from the Morningstar link if different from Part I:

• Select a mutual fund
• What is the level of return, risk and ratings for this mutual fund and provide a comment?
• What is the expense ratio for this mutual fund and provide a comment?
• List the top 5 holdings of the fund

Questions for be addressed in your paper:

• Comment on the results of the investments
• Citing at least two other sources, comment on the behaviors necessary for consistent saving and investing. Also, comment on why our society doesnt save for retirement.
• If you were to save for retirement as noted from your chart, how could this change your family tree?
• Your final comments or reflection.