Life Planning $(80$ Points $-$ Excel or Spreadsheet File Upload Required$)$

Assuming throughout that the incomes and expenses are front$-$loaded $-$ that is$,$ the incomes are payable, and

expenses are due at the beginning of each year$/$age$.$ All numbers are in real dollars $-$ no inflation consideration is

needed.

As to be seen in class, the period$-$by$-$period budget constraint is $C_t+S_{t+1}=Y_t+(1+r)S_t,$ where model time

period is $t=0,1,2,$dots corresponding to when Adam is turning $22,23,24,$dots years old, respectively. Rearranged,

the budget constraint reads:

$S_{t+1}=Y_t+(1+r)S_t-C_t$

The equation means: Net worth carrying into next year equals to income this year, adds any principal and interest

paid or received of what owed or saved, less expense this year.

Here are the situations:

Adam expects to live for $90$ years. He is turning $22$ years old today and concerned about his personal finance.

At the end of his $21,$ Adam has accrued $$190,000$ in debt, that is $(1+r)S_0=-190000$

He will start his first job today as he turns $22$ years old. It is expected that his entry salary would be $$50,000$

in today's money. The career would lead to a real salary growth trajectory of $5\%$ annually. $-$ These cannot

be changed

The minimum retirement age in his industry is when one turns $62$ years old $-$ which is the most preferred

choice. The earlier the retirement, the better $-$ so that he can spend more time with his grandchildren. But

Adam will face the mandatory retirement age of $68.$

Immediately after college, his annual expenditure is $$50,000$ in today's money, and is expected to increase at

$3\%$ in real terms annually throughout his lifetime $-$ these cannot be changed.

Investment and borrowing are at $7\%$ real interest rate. Taxes have already been considered for in the pro$-$

jected numbers. Would the current plan be financially sufficient for Adam to survive if he retires when he turns $62$ years old?

Would there be any estate left for Adam$$s grandchildren? Would he have sufficient net worth to survive until he

becomes $90$ years old? If not, could Adam have done anything differently to his retirement age decision?

Given his perfect foresight $($say$,$ he has a crystal ball for this information$),$ Adam is also concerned that he would

need to pay a one$-$time additional expense of $$250,000$ for hospital bills and accidents he is liable at the age of $40.$

Would Adam have sufficient net worth to survive until he becomes $90$ years old? Could the plan call for Adam to

do anything differently in his decision to retire?

Present a detailed financial plan for Adam$$s year$-$by$-$year real dollars of net worth with saving and borrowing

amounts, in verbal discussion, in numbers on Excel or spreadsheet with traceable formulas and in graph through

his age, for each scenario. Make this answer overall well thought out making sure it covers everything answer wise