Upon starting you new job after graduation, you’ve been confronted with selecting investment for your 401K retirement plan. You have four choices for investing your money: • A money market fund which has historically returned about 5% per year. • A long-term bond which has earned an average annual rate of return of 8% • A conservative common stock fund which has earned 10% per year. • An aggressive common stock fund which has historically earned 14% per year. a. If you were to contribute $3,600 per year (at the end of each year) for the next 35 years, how much would you accumulate in each of the above funds? (Use FV function) b. Recalculate part a in a separate excel worksheet (same excel file), but now change your worksheet appropriately so that it allows for non-annual investments (monthly, weekly, quarterly etc.). The annual investment is still $3,600. For example, when you invest quarterly, you invest $900 (=$3,600/4) four times a year. What is the FV in each fund? c. In the same worksheet where you have the setup for part b, create 4 data tables that show the relationship between the frequency of the investment (assumption cell) and the future value (output cell) for each of the above funds. Then use the data from the data tables to create 4 graphs that show the relationship between the investment frequency and the future value for each fund.
Upon starting you new job after graduation, you’ve been confronted with selecting investment for your 401K retirement plan. You have four choices for investing your money:
• A
• A long-term bond which has earned an average annual
• A conservative common stock fund which has earned 10% per year.
• An aggressive common stock fund which has historically earned 14% per year.
a. If you were to contribute $3,600 per year (at the end of each year) for the next 35 years, how much would you accumulate in each of the above funds? (Use FV function)
b. Recalculate part a in a separate excel worksheet (same excel file), but now change your worksheet appropriately so that it allows for non-annual investments (monthly, weekly, quarterly etc.). The annual investment is still $3,600. For example, when you invest quarterly, you invest $900 (=$3,600/4) four times a year. What is the FV in each fund?
c. In the same worksheet where you have the setup for part b, create 4 data tables that show the relationship between the frequency of the investment (assumption cell) and the
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