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Financial Project Excel

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As an Ivy Tech student, you are making an investment in your education. This project will look at how that investment will pay off when you graduate and get the job you are pursuing in your desired field. You will be comparing your future finances with someone who is not a college graduate. Assume that the median annual income for a non-college graduate (High School Graduate only) is $32,500 (although the actual value is most likely much higher). Use this value in your comparison statements of absolute and relative changes.

In this project you are required to do the following:
Create an Excel spreadsheet to help calculate the correct values for housing and retirement.

1. Explain what job you have chosen and why. Use the median annual salary from the following website https://www.bls.gov/ooh. (You may use another website if your job is not listed.) Compare your salary to that of a (non-college) high school graduate. How does your salary compare to the high school graduate? Use BOTH an absolute change and relative change statement for your comparison.

Mortgage Loan
2. Assume you are planning on spending a certain amount of income towards a mortgage. Further assume a 30-year fixed-rate mortgage with an APR of 2.35%. You plan on spending 32% of your monthly gross income towards your mortgage. Make sure to show at least 1 sample formula that you used in Excel to get the house price.
• If you spend 32% of your monthly salary towards a house, what is the highest price house you can afford?
• What is the highest priced house a high school graduate can afford?
• Use an absolute change statement to compare the house price of the high school graduate with the price of your house.

Retirement Account
3. Assume that your selected job has a retirement plan that allows you to save for 35 years.
• If 8% of your monthly income is put into a retirement account, how much should you expect if the annual return is 3.75%?
• How much should a high school graduate expect to get if they also save 8% of their salary for 35 years?
• Use an absolute change statement to compare the retirement accounts of the highs school graduate and your retirement. Make sure to show at least 1 sample formula used to get the retirement price.

Salary Increase
4. Imagine if your job gives a salary raise of 2.25% each year.
• How long will it take (rounded to the whole year) for your salary to be twice as much as when you started?
• If the high school graduate also received the same percentage raise, how long would it take for them to get twice as much money (rounded to the whole year)?
• Compare the years for both the college graduate and the high school graduate. Explain the reasoning for your answer.

5. Consider working for a company that gives you 2 options for a yearly increase in your salary:
A. You can take a wage increase of 2.25% of your salary.
B. You can take a flat wage increase of $1400 added to your salary
• Which scenario should you take for your job, option A or B?
• Explain why you chose your option from the previous question. Make sure to address any absolute or relative change statements as needed.
• Should the high school graduate take option A or B?
• Justify your answer for the high school graduate.

Attachments
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Solution Summary

The Excel file contains all formulas and calculations for the project. The Word file uses the formulas and calculations in Excel to answer the questions in the project. Values in Excel can be changed to arrive at the appropriate answers.

Solution provided by:
Education
  • MSc, California State Polytechnic University, Pomona
  • MBA, University of California, Riverside
  • BSc, California State Polytechnic University, Pomona
  • BSc, California State Polytechnic University, Pomona
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  • "Hello, thank you for your answer for my probability question. However, I think you interpreted the second and third question differently than was meant, as the assumption still stands that a person still independently ranks the n options first. The probability I am after is the probability that this independently determined ranking then is equal to one of the p fixed rankings. Similarly for the third question, where the x people choose their ranking independently, and then I want the probability that for x people this is equal to one particular ranking. I was wondering if you could help me with this. "
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