Please show how to run simulation for question 1 to reach 1,000,000 goal using goal seek on excel

CASE PROBLEM: FOUR CORNERS What will your portfolio be worth in 10 years? In 20 years? When you stop working? The Human Resources Department at Four Corners Corporation was asked to develop a financial planning model that would help employees address these questions. Tom Gifford was asked to lead this effort and decided to begin by developing a financial plan for himself. Tom has a degree in business and, at the age of 40, is making $85,000 per he do it? year. Through contributions to his company's retirement program and the receipt oper small inheritance, Tom has accumulated a portfolio valued at $50,000. Tom plans to work 20 more years and hopes to accumulate a portfolio valued at $1,000,000. Can Tom began with a few assumptions about his future salary, his new investment contributions, and his portfolio growth rate. He assumed a 5% annual salary growth rate and plans to make new investment contributions at 6% of his salary. After some research on historical stock market performance, Tom decided that a 10% annual portfolio growth rate was reasonable. Using these assumptions, Tom developed the following Excel worksheet: B D E G 1 Four Corners 2 3 Age 40 4 Current Salary $85,000 5 Current Portfolio $50,000 6 Annual Investment Rate 6% 7 Salary Growth Rate 5% 8 Portfolio Growth Rate 10% 9 10 Year Beginning Balance Salary New Investment Earnings Ending Balance Age 11 1 $50,000 $85,000 $5,100 $5,255 $60,355 41 12 2 $60,355 $89,250 $5,355 $6,303 $72,013 42 13 3 $72,013 $93,713 $5,623 $7,482 $85,118 43 14 4 $85,118 $98,398 $5.904 $8,807 $99,829 44 15 5 $99,829 $103,318 $6,199 $10,293 $116,321 45 16 portfolio earnings for a given year, Tom assumed that his new investment contribution The worksheet provides a financial projection for the next five years. In computing the would occur evenly throughout the year, and thus half of the new investment could be included in the computation of the portfolio earnings for the year. From the worksheet, we see that, at age 45, Tom is projected to have a portfolio valued at $116,321 Tom's plan was to use this worksheet as a template to develop financial plans for employee, and rows would be added to it to reflect the employee's planning horizon After adding another 15 rows to the worksheet, Tom found that he could expect to have a portfolio of S772,722 after 20 years. Tom then took his results to show his boss, Kate Krystkowiak Although Kate was pleased with Tom's progress, she voiced several criticisms. One of the criticisms was the assumption of a constant annual salary growth rate. She noted that most employees experience some variation in the annual salary growth rate from year to year. In addition, she pointed out that the constant annual portfolio growth rate was unrealistic and that the actual growth rate would vary considerably from year to year. She further suggested that a simulation model for the portfolio projection might allow Tom to account for the random variability in the salary growth rate and the portfolio growth rate. After some research, Tom and Kate decided to assume that the annual salary growth rate would vary from 0 to 5% and that a uniform probability distribution would provide a realistic approximation. Four Comers' accountants suggested that the annual portfolio growth rate could be approximated by a normal probability distribution with a mean of 10% and a standard deviation of 5%. With this information, Tom set off to redesign his spreadsheet so that it could be used by the company's employees for financial planning. Managerial Report Play the role of Tom Gifford, and develop a simulation model for financial planning. Write a report for Tom's boss and, at a minimum, include the following: 1. Without considering the random variability. extend the current worksheet to 20 years. Confirm that by using the constant annual salary growth rate and the constant annual portfolio growth rate, Tom can expect to have a 20-year portfolio of $772,722. What would Tom's annual investment rate have to increase to in order for his portfolio to reach a 20-year, $1,000,000 goal? (Hint: Use Goal Seek.) 2. Redesign the spreadsheet model to incorporate the random variability of the annual DATA file FourCorners wof Gool Seek salary growth rate and the annual portfolio growth rate into a simulation model. Assume that Tom is willing to use the annual investment rate that predicted a 20- year, $1,000,000 portfolio in part 1. Show how to simulate Tom's 20-year financial plan. Use results from the simulation model to comment on the uncertainty associated with Tom reaching the 20-year, $1,000,000 goal. 3. What recommendations do you have for employees with a current profile similar to Tom's after seeing the impact of the uncertainty in the annual salary growth rate and the annual portfolio growth rate? 4. Assume that Tom is willing to consider working 25 more years instead of 20 years, What is your assessment of this strategy if Tom's goal is to have a portfolio worth $1,000,000? 5. Discuss how the financial planning model developed for Tom Gifford can be used as a template to develop a financial plan for any of the company's employees. A B C D E F G H 1 2 Four Corners 3 4 Age 40 5 Current Salary 85,000 6 Current Portfolio 50000 7 Annual Investment Rate 6% 8 Salary Growth Rate 5% 9 Portfolio Growth Rate 10% 10 11 Year 1 Beg. Bal Salary 12 1 $ 50,000 $ 13 2 $ 60,355 $ 14 3 $ 72,013 $ 15 4 $ 85,118 $ 16 5 $ 99,829 $ 17 6 $ 116,321 $ 18 7 $ 134,788 $ 19 8 $ 155,442 $ 20 9 $ 178,522 $ 21 10 $ 204,286 $ 22 11 $ 233,022 $ 23 12 $ 265,047 $ 24 13 $ 300,710 $ 25 14 $ 340,398 $ 26 15 $ 384,535 $ 27 16 $ 433,591 $ 28 17 $ 488,083 $ 29 18 $ 548,581 $ 30 19 $ 615,713 $ 31 20 $ 690,171 $ 32 85,000 89,250 93,713 98,398 103,318 108,484 113,908 119,604 125,584 131,863 138,456 145,379 152,648 160,280 168,294 176,709 185,544 194,822 204,563 214,791 New Investment Earnings 5100 $ 5,255 5355 $ 6,303 5623 $ 7,482 5904 $ 8,807 6199 $ 10,293 6509 $ 11,958 6834 $ 13,820 7176 $ 15,903 7535 $ 18,229 7912 $ 20,824 8307 $ 23,718 8723 $ 26,941 9159 $ 30,529 9617 $ 34,521 10098 $ 38,958 10603 $ 43,889 11133 $ 49,365 11689 $ 55,443 12274 $ 62,185 12887 $ 69,662 Ending Balance Age 60,355 72,013 85,118 99,829 116,321 134,788 155,442 178,522 204,286 233,022 265,047 300,710 340,398 384,535 433,591 488,083 548,581 615,713 690,171 772,720 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60