Mini case #1 - Retirement Planning
This assignment is to be completed in Excel. When completed, submit the exercise by the due date in Blackboard (BB) and Attach a copy of the excel spreadsheet.
Case Narrative:
Jim Nasium is age 50 and plans to retire in 20 years (at age 70). He has retirement savings in a mutual fund account, which has a current balance of $10,000 (Jim does not plan to add any additional money to this account). Also, Jim opened a 401K retirement account with his new employer and will contribute $15,000 per year into his 401K until retirement.
• If Jim's mutual fund account grows at an annual rate of 5.0% how much money will Jim have in his mutual fund account at age 70? (6 points)
• If Jim's 401K account grows at an annual rate of 5.0% per year, how much money will Jim have in his 401K account at age 70? (6 points)
• What is the total investment balance of Jim's retirement account at the age of 70? (6 points)
• At retirement, Jim plans take the investment balance from his mutual fund account and the balance from his 401K account and combine them into an IRA account. To minimize risk, his IRA account will invest in more conservative securities. As a result, Jim anticipates his annual IRA returns to be about 4.0% during retirement. While in retirement, Jim plans to withdraw $40,000 per year from his IRA account over the next 20 years. Is this possible? Explain why or why not? (6 points)
• If all 4 questions answered correctly (1 point)
