Solve step by step using excel: Upon starting your new job after college, you've been confronted with selecting the investments for your 401(k) retirement plan. You have four choices for investing your money: A money market fund that has historically returned about 1% per year. A long-term bond fund that has earned an average annual return of 4.5%. A conservative common-stock fund that has earned 6.5% per year. An aggressive common-stock fund that has earned 9.0% per year. If you were to contribute $5,500 per year for the next 35 years, how much would you accumulate in each of the above funds? Now, change your worksheet so that it allows for less than annual investments (monthly, biweekly, etc.). The annual investment will be the same, but it will be made in smaller, more frequent, amounts. Set up a scenario analysis that shows your accumulated value in each fund if you were to invest quarterly, monthly, biweekly, and weekly. Create a scenario summary of your results. What relationship do you notice between the frequency of investment and the future value? Create a column chart of the results that more clearly shows the outcome from more frequently investing.
Solve step by step using excel: Upon starting your new job after college, you've been confronted with selecting the investments for your 401(k) retirement plan. You have four choices for investing your money: A money market fund that has historically returned about 1% per year. A long-term bond fund that has earned an average annual return of 4.5%. A conservative common-stock fund that has earned 6.5% per year. An aggressive common-stock fund that has earned 9.0% per year. If you were to contribute $5,500 per year for the next 35 years, how much would you accumulate in each of the above funds? Now, change your worksheet so that it allows for less than annual investments (monthly, biweekly, etc.). The annual investment will be the same, but it will be made in smaller, more frequent, amounts. Set up a scenario analysis that shows your accumulated value in each fund if you were to invest quarterly, monthly, biweekly, and weekly. Create a scenario summary of your results. What relationship do you notice between the frequency of investment and the future value? Create a column chart of the results that more clearly shows the outcome from more frequently investing.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Solve step by step using excel: Upon starting your new job after college, you've been confronted with selecting
the investments for your 401(k) retirement plan. You have four choices for investing your money: A money
market fund that has historically returned about 1% per year. A long-term bond fund that has earned an
average annual return of 4.5%. A conservative common-stock fund that has earned 6.5% per year. An
aggressive common-stock fund that has earned 9.0% per year. If you were to contribute $5,500 per year for the
next 35 years, how much would you accumulate in each of the above funds? Now, change your worksheet so
that it allows for less than annual investments (monthly, biweekly, etc.). The annual investment will be the same,
but it will be made in smaller, more frequent, amounts. Set up a scenario analysis that shows your accumulated
value in each fund if you were to invest quarterly, monthly, biweekly, and weekly. Create a scenario summary of
your results. What relationship do you notice between the frequency of investment and the future value? Create
a column chart of the results that more clearly shows the outcome from more frequently investing.
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