Question
Matthew has a new job as business analyst. He plans to invest 15 percent of his annual salary after the tax into a retirement account
Matthew has a new job as business analyst. He plans to invest 15 percent of his annual salary after the tax into a retirement account at the end of every year for the next 25 years. Suppose that annual return is 4, and his current salary before tax is 80k which grow 3% per year. The tax will apply as 15% on the salary up to 50k and it is 20% for the salary interval of 50k and 80k and the tax rate will be 25% for the remaining salary more than 80k (for example if his salary will be 105k, he is paying 15% tax on his first 50k and 20% in the next 30 k and 25% on his next 25k of his salary). then: a) Create a spreadsheet which shows Matthew the balance of retirement account for various levels of annual investments and returns. b) If the annual return rate is uncertain and it is between 5% to 9% in any given year (hint: use = =RANDBETWEEN(2,9)/100) what would be the expected value (average) of Matthew balance after 25 years (use the model 10 times then report the average) .
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