Interpretation: Calculate accurate TVM calculations for contributions over a long$-$term with sufficient details.

Assume:

$$ $$67,000/$year income for first $5$ years of employment.

$$ Individual contribution of $6\%$ of yearly income will have a matching employer contribution of $6\%.$

$$ The expected period for investment is $40$ years of employment history.

$$ Use a $6\%$ rate of return for the TVM calculations for the first $5$ years.

$$ Compute the FV$.$

Assume:

$$ The computing income has increased to $$100,000/$year from the $$67,000/$year initial income for the next $35$ years of employment.

$$ Individual contribution of $6\%$ of yearly income will have a matching employer contribution of $6\%.$

$$ Remember the expected period for all contributions is $40$ years from the start of employment.

Application: Decide

$$ Now decide whether you will continue to use a $6\%$ rate of return on all income contributions or will you separate and create a new account from the first five years of contributions and invest the funds differently. If you do not separate the accounts, then use a $6\%$ rate of return on all funds invested. If you separate the accounts, then indicate what rates of returns you will use in each account and why.

$$ Compute the FV$.$

Analysis: Explain

$$ Your financial decisions for selecting rates of return.

$$ Your recommendations for achieving total asset accumulation.

$$ Important assumptions that you are making regarding funds that will be needed in the future.

$$ The estimation errors that may occur with your calculations.

$$ The financial detail that you are providing to establish credibility to your computations.

Representation

$$ Demonstrate the illustrations of your calculations in a way that is visually appealing and understandable.