Retirement Plan Matching up to 6% You have recently graduated with a Bachelors d
ID: 2612570 • Letter: R
Question
Retirement Plan Matching up to 6% You have recently graduated with a Bachelors degree in Hospitality Management from the Woodbury School of Business. After applying at several hotels you are offered a position, which you accept, as a sales coordinator at a limited service hotel. The starting salary is competitive and the company is experiencing substantial growth and great opportunities abound. The company also offers a competitive benefits package including matching 401k contributions up to 6%. Starting Annual Salary $30,000 Salary Growth Rate (Yr 0 to 10) 10% Salary Growth Rate (Yr 11 to 20) 5% Salary Growth Rate (Yr 21 to 40) 3% Company Contribution 6% Individual Contribution 6% Investment Interest Rate 12% Part 1: Fill in the table below using the information contained in the table above then answer the questions at the bottom of the table. (3 pts) Year Salary Annual Individual Contribution Total Contributed Annually Interest Earned On Principle Ending Principle 0 $30,000 $1,800 $3,600 $3,600 1 $33,000 $1,980 $3,960 $432 $7,992 2 $36,300 $2,178 $4,356 $959 $13,307 3 $39,930 $2,396 $4,792 $1,597 $19,695 4 $43,923 $2,635 $5,271 $2,363 $27,330 5 $48,315 $2,899 $5,798 $3,280 $36,407 6 $53,147 $3,189 $6,378 $4,369 $47,154 7 $58,462 $3,508 $7,015 $5,658 $59,827 8 $64,308 $3,858 $7,717 $7,179 $74,724 9 $70,738 $4,244 $8,489 $8,967 $92,179 10 $77,812 $4,669 $9,337 $11,061 $112,578 11 $81,703 $4,902 $9,804 $13,509 $135,892 12 $85,788 $5,147 $10,295 $16,307 $162,493 13 $90,077 $5,405 $10,809 $19,499 $192,802 14 $94,581 $5,675 $11,350 $23,136 $227,288 15 $99,310 $5,959 $11,917 $27,275 $266,479 16 $104,276 $6,257 $12,513 $31,978 $310,970 17 $109,490 $6,569 $13,139 $37,316 $361,425 18 $114,964 $6,898 $13,796 $43,371 $418,592 19 $120,712 $7,243 $14,485 $50,231 $483,309 20 $126,748 $7,605 $15,210 $57,997 $556,515 21 $130,550 $7,833 $15,666 $66,782 $638,963 22 $134,467 $8,068 $16,136 $76,676 $731,775 23 $138,501 $8,310 $16,620 $87,813 $836,208 24 $142,656 $8,559 $17,119 $100,345 $953,672 25 $146,936 $8,816 $17,632 $114,441 $1,085,745 26 $151,344 $9,081 $18,161 $130,289 $1,234,195 27 $155,884 $9,353 $18,706 $148,103 $1,401,005 28 $160,561 $9,634 $19,267 $168,121 $1,588,392 29 $165,377 $9,923 $19,845 $190,607 $1,798,845 30 $170,339 $10,220 $20,441 $215,861 $2,035,147 31 $175,449 $10,527 $21,054 $244,218 $2,300,418 32 $180,712 $10,843 $21,685 $276,050 $2,598,154 33 $186,134 $11,168 $22,336 $311,778 $2,932,269 34 $191,718 $11,503 $23,006 $351,872 $3,307,147 35 $197,469 $11,848 $23,696 $396,858 $3,727,701 36 $203,393 $12,204 $24,407 $447,324 $4,199,432 37 $209,495 $12,570 $25,139 $503,932 $4,728,503 38 $215,780 $12,947 $25,894 $567,420 $5,321,817 39 $222,253 $13,335 $26,670 $638,618 $5,987,106 40 $228,921 $13,735 $27,471 $718,453 $6,733,029 Part 2: How much will you contribute to your 401K over the next 40 years? (1 pt) $305,491 Part 3: How much will you have for retirement after 40 years? (1 pt) $6,733,029 Part 4: How much will you have for retirement in today's dollars after 40 years assuming a rate of inflation of 3%? (drop invenstmen rate from 12% to 9%) (1 pt) Part 5: Assuming that you retire after 40 years and want to live on the interest earned on your principle alone, how much could you spend per year? (1 pt) $807,963.50 Part 6: If you only contribute 2% to retirement how much will you have for retirement after 40 years? (1 pt) Part 7: If you invest in low risk investments and only achieve an average return of 6% per year how much will you have after 40 years? (1 pt) Retirement Plan Matching up to 6% You have recently graduated with a Bachelors degree in Hospitality Management from the Woodbury School of Business. After applying at several hotels you are offered a position, which you accept, as a sales coordinator at a limited service hotel. The starting salary is competitive and the company is experiencing substantial growth and great opportunities abound. The company also offers a competitive benefits package including matching 401k contributions up to 6%. Starting Annual Salary $30,000 Salary Growth Rate (Yr 0 to 10) 10% Salary Growth Rate (Yr 11 to 20) 5% Salary Growth Rate (Yr 21 to 40) 3% Company Contribution 6% Individual Contribution 6% Investment Interest Rate 12% Part 1: Fill in the table below using the information contained in the table above then answer the questions at the bottom of the table. (3 pts) Year Salary Annual Individual Contribution Total Contributed Annually Interest Earned On Principle Ending Principle 0 $30,000 $1,800 $3,600 $3,600 1 $33,000 $1,980 $3,960 $432 $7,992 2 $36,300 $2,178 $4,356 $959 $13,307 3 $39,930 $2,396 $4,792 $1,597 $19,695 4 $43,923 $2,635 $5,271 $2,363 $27,330 5 $48,315 $2,899 $5,798 $3,280 $36,407 6 $53,147 $3,189 $6,378 $4,369 $47,154 7 $58,462 $3,508 $7,015 $5,658 $59,827 8 $64,308 $3,858 $7,717 $7,179 $74,724 9 $70,738 $4,244 $8,489 $8,967 $92,179 10 $77,812 $4,669 $9,337 $11,061 $112,578 11 $81,703 $4,902 $9,804 $13,509 $135,892 12 $85,788 $5,147 $10,295 $16,307 $162,493 13 $90,077 $5,405 $10,809 $19,499 $192,802 14 $94,581 $5,675 $11,350 $23,136 $227,288 15 $99,310 $5,959 $11,917 $27,275 $266,479 16 $104,276 $6,257 $12,513 $31,978 $310,970 17 $109,490 $6,569 $13,139 $37,316 $361,425 18 $114,964 $6,898 $13,796 $43,371 $418,592 19 $120,712 $7,243 $14,485 $50,231 $483,309 20 $126,748 $7,605 $15,210 $57,997 $556,515 21 $130,550 $7,833 $15,666 $66,782 $638,963 22 $134,467 $8,068 $16,136 $76,676 $731,775 23 $138,501 $8,310 $16,620 $87,813 $836,208 24 $142,656 $8,559 $17,119 $100,345 $953,672 25 $146,936 $8,816 $17,632 $114,441 $1,085,745 26 $151,344 $9,081 $18,161 $130,289 $1,234,195 27 $155,884 $9,353 $18,706 $148,103 $1,401,005 28 $160,561 $9,634 $19,267 $168,121 $1,588,392 29 $165,377 $9,923 $19,845 $190,607 $1,798,845 30 $170,339 $10,220 $20,441 $215,861 $2,035,147 31 $175,449 $10,527 $21,054 $244,218 $2,300,418 32 $180,712 $10,843 $21,685 $276,050 $2,598,154 33 $186,134 $11,168 $22,336 $311,778 $2,932,269 34 $191,718 $11,503 $23,006 $351,872 $3,307,147 35 $197,469 $11,848 $23,696 $396,858 $3,727,701 36 $203,393 $12,204 $24,407 $447,324 $4,199,432 37 $209,495 $12,570 $25,139 $503,932 $4,728,503 38 $215,780 $12,947 $25,894 $567,420 $5,321,817 39 $222,253 $13,335 $26,670 $638,618 $5,987,106 40 $228,921 $13,735 $27,471 $718,453 $6,733,029 Part 2: How much will you contribute to your 401K over the next 40 years? (1 pt) $305,491 Part 3: How much will you have for retirement after 40 years? (1 pt) $6,733,029 Part 4: How much will you have for retirement in today's dollars after 40 years assuming a rate of inflation of 3%? (drop invenstmen rate from 12% to 9%) (1 pt) Part 5: Assuming that you retire after 40 years and want to live on the interest earned on your principle alone, how much could you spend per year? (1 pt) $807,963.50 Part 6: If you only contribute 2% to retirement how much will you have for retirement after 40 years? (1 pt) Part 7: If you invest in low risk investments and only achieve an average return of 6% per year how much will you have after 40 years? (1 pt)Explanation / Answer
Part 1 Year Salary Annual Individual Contribution Total contributed annually Interest earned on principal Ending principal 0 $30,000 $1,800 $3,600 $3,600 1 $33,000 $1,980 $3,960 $432 $7,992 2 $36,300 $2,178 $4,356 $959 $13,307 3 $39,930 $2,396 $4,792 $1,597 $19,696 4 $43,923 $2,635 $5,270 $2,364 $27,330 5 $48,315 $2,899 $5,798 $3,280 $36,408 6 $53,147 $3,189 $6,378 $4,369 $47,155 7 $58,462 $3,508 $7,016 $5,659 $59,830 8 $64,308 $3,858 $7,716 $7,180 $74,726 9 $70,739 $4,244 $8,488 $8,967 $92,181 10 $77,813 $4,669 $9,338 $11,062 $1,12,581 11 $81,704 $4,902 $9,804 $13,510 $1,35,895 12 $85,789 $5,147 $10,294 $16,307 $1,62,496 13 $90,078 $5,405 $10,810 $19,500 $1,92,806 14 $94,582 $5,675 $11,350 $23,137 $2,27,293 15 $99,311 $5,959 $11,918 $27,275 $2,66,486 16 $1,04,277 $6,257 $12,514 $31,978 $3,10,978 17 $1,09,491 $6,569 $13,138 $37,317 $3,61,433 18 $1,14,966 $6,898 $13,796 $43,372 $4,18,601 19 $1,20,714 $7,243 $14,486 $50,232 $4,83,319 20 $1,26,750 $7,605 $15,210 $57,998 $5,56,527 21 $1,30,553 $7,833 $15,666 $66,783 $6,38,976 22 $1,34,470 $8,068 $16,136 $76,677 $7,31,789 23 $1,38,504 $8,310 $16,620 $87,815 $8,36,224 24 $1,42,659 $8,560 $17,120 $1,00,347 $9,53,691 25 $1,46,939 $8,816 $17,632 $1,14,443 $10,85,766 26 $1,51,347 $9,081 $18,162 $1,30,292 $12,34,220 27 $1,55,887 $9,353 $18,706 $1,48,106 $14,01,032 28 $1,60,564 $9,634 $19,268 $1,68,124 $15,88,424 29 $1,65,381 $9,923 $19,846 $1,90,611 $17,98,881 30 $1,70,342 $10,221 $20,442 $2,15,866 $20,35,189 31 $1,75,452 $10,527 $21,054 $2,44,223 $23,00,466 32 $1,80,716 $10,843 $21,686 $2,76,056 $25,98,208 33 $1,86,137 $11,168 $22,336 $3,11,785 $29,32,329 34 $1,91,721 $11,503 $23,006 $3,51,879 $33,07,214 35 $1,97,473 $11,848 $23,696 $3,96,866 $37,27,776 36 $2,03,397 $12,204 $24,408 $4,47,333 $41,99,517 37 $2,09,499 $12,570 $25,140 $5,03,942 $47,28,599 38 $2,15,784 $12,947 $25,894 $5,67,432 $53,21,925 39 $2,22,258 $13,335 $26,670 $6,38,631 $59,87,226 40 $2,28,926 $13,736 $27,472 $7,18,467 $67,33,165 $3,05,496 $6,10,992 Part 2 How much will you contribute to your 401K over the next 40 years $3,05,496 Part 3 How much will you have for retirement after 40 years $67,33,165 Part 4 How much will you have for retirement in today's dollars after 40 years $33,08,675 assuming a rate of inflation of 3%. (drop investment rate from 12% to 9%) Year Salary Annual Individual Contribution Total contributed annually Interest earned on principal Ending principal 0 $30,000 $1,800 $3,600 $3,600 1 $33,000 $1,980 $3,960 $324 $7,884 2 $36,300 $2,178 $4,356 $710 $12,950 3 $39,930 $2,396 $4,792 $1,166 $18,908 4 $43,923 $2,635 $5,270 $1,702 $25,880 5 $48,315 $2,899 $5,798 $2,329 $34,007 6 $53,147 $3,189 $6,378 $3,061 $43,446 7 $58,462 $3,508 $7,016 $3,910 $54,372 8 $64,308 $3,858 $7,716 $4,893 $66,981 9 $70,739 $4,244 $8,488 $6,028 $81,497 10 $77,813 $4,669 $9,338 $7,335 $98,170 11 $81,704 $4,902 $9,804 $8,835 $1,16,809 12 $85,789 $5,147 $10,294 $10,513 $1,37,616 13 $90,078 $5,405 $10,810 $12,385 $1,60,811 14 $94,582 $5,675 $11,350 $14,473 $1,86,634 15 $99,311 $5,959 $11,918 $16,797 $2,15,349 16 $1,04,277 $6,257 $12,514 $19,381 $2,47,244 17 $1,09,491 $6,569 $13,138 $22,252 $2,82,634 18 $1,14,966 $6,898 $13,796 $25,437 $3,21,867 19 $1,20,714 $7,243 $14,486 $28,968 $3,65,321 20 $1,26,750 $7,605 $15,210 $32,879 $4,13,410 21 $1,30,553 $7,833 $15,666 $37,207 $4,66,283 22 $1,34,470 $8,068 $16,136 $41,965 $5,24,384 23 $1,38,504 $8,310 $16,620 $47,195 $5,88,199 24 $1,42,659 $8,560 $17,120 $52,938 $6,58,257 25 $1,46,939 $8,816 $17,632 $59,243 $7,35,132 26 $1,51,347 $9,081 $18,162 $66,162 $8,19,456 27 $1,55,887 $9,353 $18,706 $73,751 $9,11,913 28 $1,60,564 $9,634 $19,268 $82,072 $10,13,253 29 $1,65,381 $9,923 $19,846 $91,193 $11,24,292 30 $1,70,342 $10,221 $20,442 $1,01,186 $12,45,920 31 $1,75,452 $10,527 $21,054 $1,12,133 $13,79,107 32 $1,80,716 $10,843 $21,686 $1,24,120 $15,24,913 33 $1,86,137 $11,168 $22,336 $1,37,242 $16,84,491 34 $1,91,721 $11,503 $23,006 $1,51,604 $18,59,101 35 $1,97,473 $11,848 $23,696 $1,67,319 $20,50,116 36 $2,03,397 $12,204 $24,408 $1,84,510 $22,59,034 37 $2,09,499 $12,570 $25,140 $2,03,313 $24,87,487 38 $2,15,784 $12,947 $25,894 $2,23,874 $27,37,255 39 $2,22,258 $13,335 $26,670 $2,46,353 $30,10,278 40 $2,28,926 $13,736 $27,472 $2,70,925 $33,08,675 $3,05,496 $6,10,992 Part 5 Assuming that you retire after 40 years and want to live on the interest earned $8,07,964 on your principal alone, how much could you spend per year. Part 6 If you only contribute 2% to retirement how much will you have for retirement $44,88,704 after 40 years. Year Salary Annual Individual Contribution Total contributed annually Interest earned on principal Ending principal 0 $30,000 $600 $2,400 $2,400 1 $33,000 $660 $2,640 $288 $5,328 2 $36,300 $726 $2,904 $639 $8,871 3 $39,930 $799 $3,195 $1,065 $13,131 4 $43,923 $878 $3,513 $1,576 $18,220 5 $48,315 $966 $3,865 $2,186 $24,271 6 $53,147 $1,063 $4,252 $2,913 $31,436 7 $58,462 $1,169 $4,677 $3,772 $39,885 8 $64,308 $1,286 $5,144 $4,786 $49,815 9 $70,739 $1,415 $5,659 $5,978 $61,452 10 $77,813 $1,556 $6,225 $7,374 $75,051 11 $81,704 $1,634 $6,536 $9,006 $90,593 12 $85,789 $1,716 $6,863 $10,871 $1,08,327 13 $90,078 $1,802 $7,207 $12,999 $1,28,533 14 $94,582 $1,892 $7,567 $15,424 $1,51,524 15 $99,311 $1,986 $7,945 $18,183 $1,77,652 16 $1,04,277 $2,086 $8,343 $21,318 $2,07,313 17 $1,09,491 $2,190 $8,759 $24,878 $2,40,950 18 $1,14,966 $2,299 $9,197 $28,914 $2,79,061 19 $1,20,714 $2,414 $9,657 $33,487 $3,22,205 20 $1,26,750 $2,535 $10,140 $38,665 $3,71,010 21 $1,30,553 $2,611 $10,444 $44,521 $4,25,975 22 $1,34,470 $2,689 $10,757 $51,117 $4,87,849 23 $1,38,504 $2,770 $11,080 $58,542 $5,57,471 24 $1,42,659 $2,853 $11,413 $66,897 $6,35,781 25 $1,46,939 $2,939 $11,755 $76,294 $7,23,830 26 $1,51,347 $3,027 $12,108 $86,860 $8,22,798 27 $1,55,887 $3,118 $12,471 $98,736 $9,34,005 28 $1,60,564 $3,211 $12,845 $1,12,081 $10,58,931 29 $1,65,381 $3,308 $13,231 $1,27,072 $11,99,234 30 $1,70,342 $3,407 $13,628 $1,43,908 $13,56,770 31 $1,75,452 $3,509 $14,036 $1,62,812 $15,33,618 32 $1,80,716 $3,614 $14,457 $1,84,034 $17,32,109 33 $1,86,137 $3,723 $14,891 $2,07,853 $19,54,853 34 $1,91,721 $3,834 $15,337 $2,34,582 $22,04,772 35 $1,97,473 $3,949 $15,797 $2,64,573 $24,85,142 36 $2,03,397 $4,068 $16,272 $2,98,217 $27,99,631 37 $2,09,499 $4,190 $16,760 $3,35,956 $31,52,347 38 $2,15,784 $4,316 $17,263 $3,78,282 $35,47,892 39 $2,22,258 $4,445 $17,780 $4,25,747 $39,91,419 40 $2,28,926 $4,579 $18,315 $4,78,970 $44,88,704 $1,01,832 $4,07,328 Part 7 If you invest in low risk investments and only achieve an average return of 6% $17,34,444 per year how much will you have after 40 years Year Salary Annual Individual Contribution Total contributed annually Interest earned on principal Ending principal 0 $30,000 $1,800 $3,600 $3,600 1 $33,000 $1,980 $3,960 $216 $7,776 2 $36,300 $2,178 $4,356 $467 $12,599 3 $39,930 $2,396 $4,792 $756 $18,147 4 $43,923 $2,635 $5,270 $1,089 $24,506 5 $48,315 $2,899 $5,798 $1,470 $31,774 6 $53,147 $3,189 $6,378 $1,906 $40,058 7 $58,462 $3,508 $7,016 $2,403 $49,477 8 $64,308 $3,858 $7,716 $2,969 $60,162 9 $70,739 $4,244 $8,488 $3,610 $72,260 10 $77,813 $4,669 $9,338 $4,336 $85,934 11 $81,704 $4,902 $9,804 $5,156 $1,00,894 12 $85,789 $5,147 $10,294 $6,054 $1,17,242 13 $90,078 $5,405 $10,810 $7,035 $1,35,087 14 $94,582 $5,675 $11,350 $8,105 $1,54,542 15 $99,311 $5,959 $11,918 $9,273 $1,75,733 16 $1,04,277 $6,257 $12,514 $10,544 $1,98,791 17 $1,09,491 $6,569 $13,138 $11,927 $2,23,856 18 $1,14,966 $6,898 $13,796 $13,431 $2,51,083 19 $1,20,714 $7,243 $14,486 $15,065 $2,80,634 20 $1,26,750 $7,605 $15,210 $16,838 $3,12,682 21 $1,30,553 $7,833 $15,666 $18,761 $3,47,109 22 $1,34,470 $8,068 $16,136 $20,827 $3,84,072 23 $1,38,504 $8,310 $16,620 $23,044 $4,23,736 24 $1,42,659 $8,560 $17,120 $25,424 $4,66,280 25 $1,46,939 $8,816 $17,632 $27,977 $5,11,889 26 $1,51,347 $9,081 $18,162 $30,713 $5,60,764 27 $1,55,887 $9,353 $18,706 $33,646 $6,13,116 28 $1,60,564 $9,634 $19,268 $36,787 $6,69,171 29 $1,65,381 $9,923 $19,846 $40,150 $7,29,167 30 $1,70,342 $10,221 $20,442 $43,750 $7,93,359 31 $1,75,452 $10,527 $21,054 $47,602 $8,62,015 32 $1,80,716 $10,843 $21,686 $51,721 $9,35,422 33 $1,86,137 $11,168 $22,336 $56,125 $10,13,883 34 $1,91,721 $11,503 $23,006 $60,833 $10,97,722 35 $1,97,473 $11,848 $23,696 $65,863 $11,87,281 36 $2,03,397 $12,204 $24,408 $71,237 $12,82,926 37 $2,09,499 $12,570 $25,140 $76,976 $13,85,042 38 $2,15,784 $12,947 $25,894 $83,103 $14,94,039 39 $2,22,258 $13,335 $26,670 $89,642 $16,10,351 40 $2,28,926 $13,736 $27,472 $96,621 $17,34,444 $3,05,496 $6,10,992
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