$1,000,000 in Savings
Review the information and skills in Chapter 6 of the course packet. Then turn to lab B on page 6-28. Complete Lab B part A with the following changes. First, update the columns and layout as follows:
- Use 5.0% as the yearly interest rate
- Assume that you begin with an initial balance of $10000. Note that in the lab notebook, the problem statement says $2400, but the image of the spreadsheet shows a $0 initial balance.
- As described in the lab report, the interest is calculated based on the balance INCLUDING that year's contribution. Instead, calculate the interest first, then add the yearly contribution.
Use your spreadsheet to answer the following questions. Cut and paste the relevant portion of the spreadsheet into your lab report.
- If you start with $10,000 at age 24, contribute $2000 annually and earn 5%, at what age will you have $100,000? At what age will you have $500,000? $1,000,000?
- If you start with $0 at age 30, contribute $3000 annually and earn 5%, at what age will you have $1,000,000?
- If you start with $0 at age 30, contribute $1000 annually and earn 8%, at what age will you have $1,000,000?
- Find some combination of initial values that will allow you to retire at age 55 with $1,000,000. (Interest rate CANNOT be greater than 9%. Realistically, it should be lower)
$1,000,000 in Debt
Turn to page 6-30 in the lab manual, and complete Lab B part B. Modify the format as follows:
- Change to monthly payments rather than annual payments.
- Allow user to enter 3 values; everything else should be calculated.
- Add a "Start Balance" column for clarification.
Use your spreadsheet to answer the following questions in your lab report:
- With an intial balance of $1500, a montly payment of $25, and an APR of 18%, how many months will it take to pay off your debt?
- What happens if you change the montly payment to $22? Explain why.
- Create a realistic scenario in which you could accrue $1,000,000 in debt by making payments that are too small.
Lab Report
In addition to submitting your spreadsheet online via Sakai, you will also turn in a stapled, printed copy of the lab report in class on the due date. The report should include:
- All questions and answers for Part A and Part B (typed).
- Portions of spreadsheet with the data solutions highlighted for the various scenarios described in the lab.
- Summary of what you learned.