Excel Project

Please do all of the questions and make sure to have the formulas as well, not just answers.

Part B Prof. Washington has a self-managed retirement plan through his University and would like to retire in 10 years and wonders if his current and future planned savings will provide adequate future retirement income. Here's his information and goals. Prof. Washington wants a 25-year retirement annuity that begins 10 years from today with an equal annual payment equal to $70,000 today inflated at 2.5% annually over 10 years. His first retirement annuity payment would occur 10 years from today. He realizes his purchasing power will decrease over time during retirement. Prof. Washington currently has $280,000 in his University retirement account. He expects these savings and any future deposits into his University and any other retirement account will earn 7.5% compounded annually. Also, he expects to earn this same 7.5% annual return after he retires. Answer the following questions to help Prof. Washington finalize his retirement planning. 1. What is Prof. Business' desired annual retirement income? 2. How much will Prof. Washington need 10 years from today to fund his desired retirement annuity? 3. In addition to the $280,000 balance today, Prof. Washington will fund his future retirement goal from question 2 by making 10 annual equal deposits at 7.5% compounded annually into his retirement accounts starting a year from today (the last deposit will be made when Prof. Washington retires). How large does this annual deposit need to be in addition to the initial $280,000 invested in Prof. Business' retirement fund? 4. This annual figure from #3 is actually less than the Prof.'s $13,500 current annual contribution, which makes him feel a little less anxious about his future planned retirement. Also, Prof. Washington's annual retirement account contribution is based on a percentage of his salary and will increase as his salary increases. However, Prof. Washington is worried about his purchasing power eroding during retirement. He would like his first retirement withdrawal to be equal to the amount you found in #1, and then he increase each successive retirement withdrawal by 3% annually over the remaining 24 withdrawals. How much will Prof. Washington need now at retirement given Prof. Washington's 7.5% expected return? 5. In addition to the $280,000 balance today, Prof. Washington will fund his adjusted future retirement goal from question 4 by making 10 annual equal deposits at 7.5% compounded annually into his retirement accounts starting a year from today (the last deposit will be made when Prof. Washington retires). How large does this annual deposit need to be in addition to the initial $280,000 invested in Prof. Washington's retirement fund? Part C. Robert the sophomore 20-year-old star quarterback of the university soccer team, is approached about skipping his last two years of college and entering the professional soccer draft. Robert expects that his soccer career will be over by the time he is 32 years old. Talent scouts estimate that Robert could receive a signing bonus of $15 million today, along with a four-year contract for $2 million per year (payable at the end of each year). They further estimate that he could negotiate a contract for $4 million per year for the remaining eight years of his career. The scouts believe, however, that Robert will be a much higher draft pick if he improves by playing two more years of college soccer. If he stays at the university, he is expected to receive a $25 million signing bonus in two years, along with a five-year contract for $3 million per year. After that, the scouts expect Robert to obtain a five-year contract for $5 million per year to take him into retirement. Assume that Robert can earn a 8% return over this time. 1. What is the present value today (when Robert is 20) of the QB's future expected NFL earnings if he enters the NFL now? 2. What is the present value today (when Robert is 20) of the QB's future expected NFL earnings if he finishes his last 2 years of college enters the NFL 2 years from now? 3. Should Robert stay in college or go to the NFL now