FIN3403 University of South Florida Time Value of Money Assignment
Question Description
Required files are attached.
Purpose
The purpose of this project is to apply some of the concepts covered in the course. Specifically, the project requires you to develop a simple retirement plan. The approach you should take when completing this project is that the only funds you receive at retirement are those you contribute to specific retirement funds–that is, you should assume Social Security will not be available when you retire. In other words, the only funds you will have available at retirement will include amounts you have already accumulated in investments that are specifically designated for retirement and any amounts you accumulate in the future.
Extra Credit Points
Your extra credit project must follow the format contained in the Word template that you must use for your discussions/explanations and to record the results of your computations (http://sbesley.myweb.usf.edu/FIN3403/retire template-sp19.docx); if it does not, your project will not be graded, which means you will receive a grade of zero (0) for the work you submit. In addition, you should closely follow the instructions included in this document to ensure that your project is graded and that you do not lose points for not following instructions.
Prior to starting the extra credit project, it is recommended that you work Time Value of Money–Assignment #1 that is posted on the course website at http://sbesley.myweb.usf.edu/FIN3403/tvm-1.doc. If you understand the two problems given in this assignment, you should be able to complete the extra credit project without much difficulty. You must use a spreadsheet to complete the computations required for the project. The Comprehensive Notes for Chapter 4, which are posted on the course webpage, show how to use the time value of money functions that are available in Excel. The link for the Chapter 4 notes is http://sbesley.myweb.usf.edu/FIN3403/notes/tvm.pdf.
Requirements of the Project
You should already be planning for your retirement. For this reason, the extra credit project is designed to make you think about retirement now by requiring you to develop a simple, yet viable plan for achieving your retirement goals. Following are the requirements that must be included in the project. These requirements must be included in (1) the Word template that is available at http://sbesley.myweb.usf.edu/FIN3403/retire template-sp19.docx and (2) the spreadsheet template that must be used to complete the required computations, which is available at http://sbesley.myweb.usf.edu/FIN3403/retire-sp19.xls.
I.Occupation/Career Expectations. Provide a brief description of what you expect (hope) your occupation(s) will be from the time you graduate from college until you retire. Include in the description the salary range you expect to earn at the various stages of your career. Salary estimates can be obtained from a variety of sources, including USF Career Services and the library, but most of the needed information can be found on the Internet. To search the Internet, use a key phrase that identifies the area in which you expect to work. For example, if you expect to work in the finance area, the key phrase for your search should be either “finance salaries” or “salaries in finance.” Estimate your salary in five-year increments rather than annually–that is, estimate the average annual salary for the first five years of your career, the average annual salary for the second five years of your career, and so forth. When estimating the salaries you expect to earn during your career, you must consider expected inflation rates, percentage raises, and the effects of promotions.
II.Investment Horizon and Life Expectancy. Determine how long you expect to be able to contribute to a retirement fund to meet your retirement goals–that is, the number of years you expect to earn a salary in your chosen career. For example, if you intend to retire at age 65, use the number of years from when you first start your career (upon graduation from USF) until the age of 65. This will constitute your investment horizon, which is the length of time you expect to be able to invest funds to build your retirement “nest egg.” You must also determine the number of years you expect to live after retirement. To estimate this time period, you must complete the following life expectancy quizzes:
University of Connecticut Healthy Life Expectancy Calculator: https://apps.goldensoncenter.uconn.edu/HLEC/
John Hancock Life Expectancy Calculator: https://www.johnhancockinsurance.com/life-expectancy-calculator.html#
A Life-Expectancy Calculation–Foundation for Infinite Survival, Inc.: http://www.fis.org/LE-Calc/index.html
Poodwaddle Life Clock: http://www.poodwaddle.com/life/. When you finish completing the quiz, print the Summary Report. If you click the tab labeled Full Report, you will be taken to a page that provides information about h