oo T-Mobile 2:28 PM 17% + uic.blackboard.com IE201 Mini Project Personal Financi

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oo T-Mobile 2:28 PM 17% + uic.blackboard.com IE201 Mini Project Personal Financial Planning Fall 2016 A. What you need to know before deciding to do the project: 1- This project has up to 7 extra points that can be added to your total class average out of 100. 2- The project is optional. 3- It is due on Wednesday (4/27/2016) at 4:00PM. 4- It must be submitted through Blackboard (you will receive instructions for that). 5- Students who turn in the same answer (same financial scenarios) will not receive any points regardless of who has d DO NOT share your answers with anyone if you do not want this to happen. f who has developed the answer first 6- Students who do not answer all the questions and you miss answering do not perform all the requested steps will not receive any points. So even if one part of a question, you will not be given any points for the mini project. 7- Your data are kept confidential but if you still do not feel comfortable to submit your exact financial data, you can think about an imaginary scenario and submit that one. But any imaginary scenario should not be very different from a typical financial scenario of a new engineering graduate (read the mini project description below). 8- All requested information must be entered unless you do not have the related categories in your life. In that case, you can enter zero for the value of that category B. Project Description The goal of this project is to help you plan for your financial future. The first step in creating a plan is to derive r cash flow. In th is project, your planning horizon is 3

Explanation / Answer

year Scenario 1                    1                   2                   3 Full time job          50,000        51,500        53,045 PV factor Expenses: Food          12,000        12,240        12,485 Lodging          20,000        20,400        20,808 Travel            2,000           2,040           2,081 Medical            1,000           1,020           1,040 Other            2,500           2,550           2,601 total exp          37,500        38,250        39,015 Net savings          12,500        13,250        14,030 PV factor 1% 0.99009 0.98029 0.97059 2% 0.98039 0.96116 0.94232 3% 0.97087 0.94259 0.91514 4% 0.96153 0.92455 0.88899 5% 0.95238 0.90702 0.86383 PV of savings Total PW AW 1%    12,376.13 12,988.84 13,617.38    38,982.35    12,994.12 2%    12,254.88 12,735.37 13,220.75    38,210.99    12,737.00 3%    12,135.88 12,489.32 12,839.41    37,464.61    12,488.20 4%    12,019.13 12,250.29 12,472.53    36,741.94    12,247.31 5%    11,904.75 12,018.02 12,119.53    36,042.30    12,014.10 ROR 25% 25% 26%              0.76              0.25 Savings    39,780.00 Scenario 2                    1                   2                   3 partime          15,000        52,000        53,560 Food          12,000        12,240        12,485 Lodging          20,000        20,400        20,808 Travel            2,000           2,040           2,081 Medical            1,000           1,020           1,040 Other            2,500           2,550           2,601 total exp          37,500        38,250        39,015 Net savings       (22,500)        13,750        14,545 PV factor 1% 0.99009 0.98029 0.97059 2% 0.98039 0.96116 0.94232 3% 0.97087 0.94259 0.91514 4% 0.96153 0.92455 0.88899 5% 0.95238 0.90702 0.86383 PV of savings Total PW AW 1% (22,277.03) 13,478.99 14,117.23      5,319.19      1,773.06 2% (22,058.78) 13,215.95 13,706.04      4,863.22      1,621.07 3% (21,844.58) 12,960.61 13,310.71      4,426.75      1,475.58 4% (21,634.43) 12,712.56 12,930.36      4,008.50      1,336.17 5% (21,428.55) 12,471.53 12,564.41      3,607.38      1,202.46 Savings       5,795.00 ROR -149% 26% 26%

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