# S3 - Homework 3, Part (i): No Growth Without MBA Yearly...

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Homework 3, Pa Without MBA Yearly Income \$144,000.00 Percentage Saved 15% \$21,600.00 Years in Working Life 34.00 Average yearly Return on Savings 5% 16.19 349,766.73 1,837,446.32 Homework 3, Part (ii): G Without MBA Yearly Income \$144,000.00 Growth Rate for Income 4.50% Percentage Saved 15% \$21,600.00 \$20,669.86 Years in Working Life 34.00 Average yearly Return on Savings 5% 0.4785% 31.31 647,164.70 3,399,781.37 Yearly Savings, S AF (5%, 34) PV 0 (Savings) = S*AF (5%, 34) PV 34 (Savings) = [ PV 0 (Savings) ]*(1.05 34 ) Yearly Savings at t=1, S 1 Artifical Construct for Computation, S 0 = S 1 / (1+g) Artifical Construct for Computation, q = (r-g) / (1+g) AF (0.4785%, 34) PV 0 (Savings) = S 0 *AF (.4785%, 34) PV 34 (Savings) = [ PV 0 (Savings) ]*(1.05 34 )

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art (i): No Growth With MBA Yearly Income \$180,000.00 Percentage Saved 15% \$27,000.00 Years in Working Life 32.00 Average yearly Return on Savings 5% 15.80 426,672.27 2,033,068.39 Cash Out Flows With MBA Loan at t=0 \$(63,000.00) Loan at t=1 \$(63,000.00) (646,161.80) 1,386,906.59 rowth at Different Rates With MBA Yearly Income \$180,000.00 Growth Rate for Income 6.75% Percentage Saved 15% \$27,000.00 \$25,292.74 Years in Working Life 32.00 Average yearly Return on Savings 5% -1.6393% 42.52 1,075,569.57 5,125,026.06 Cash Out Flows With MBA Loan at t=0 \$(63,000.00) Loan at t=1 \$(63,000.00) (646,161.80) 4,478,864.26 Yearly Savings, S AF (5%, 32) PV 2 (Savings) = S*AF (5%, 32) PV 34 (Savings) = [ PV 2 (Savings) ]*(1.05 32 ) PV 34 (Cash Out Flows) PV 34 (Savings Net of Cash Out Flows) Yearly Savings at t=3, S 3 Artifical Construct for Computation, S 2 = S 3 / (1+g) Artifical Construct for Computation, q = (r-g) / (1+g) AF (-1.6393%, 32) PV 2 (Savings) = S 0 *AF (5%, 32) PV 34 (Savings) = [ PV 2 (Savings) ]*(1.05 32 ) PV 34 (Cash Outflows) PV 34 (Savings Net of Other Cash Flows)
Beginning Balance Amount Saved during year [1] [2] [3] = [6] from last year [4] 0 8/31/2009 \$- \$- \$- 1 8/31/2010 \$- \$21,600.00 \$- 2 8/31/2011 \$21,600.00 \$21,600.00 \$1,080.00 3 8/31/2012 \$44,280.00 \$21,600.00 \$2,214.00 4 8/31/2013 \$68,094.00 \$21,600.00 \$3,404.70 5 8/31/2014 \$93,098.70 \$21,600.00 \$4,654.94 6 8/31/2015 \$119,353.64 \$21,600.00 \$5,967.68 7 8/31/2016 \$146,921.32 \$21,600.00 \$7,346.07 8 8/31/2017 \$175,867.38 \$21,600.00 \$8,793.37 9 8/31/2018 \$206,260.75 \$21,600.00 \$10,313.04 10 8/31/2019 \$238,173.79 \$21,600.00 \$11,908.69 11 8/31/2020 \$271,682.48 \$21,600.00 \$13,584.12 12 8/31/2021 \$306,866.60 \$21,600.00 \$15,343.33 13 8/31/2022 \$343,809.93 \$21,600.00 \$17,190.50 14 8/31/2023 \$382,600.43 \$21,600.00 \$19,130.02 15 8/31/2024 \$423,330.45 \$21,600.00 \$21,166.52 16 8/31/2025 \$466,096.97 \$21,600.00 \$23,304.85 17 8/31/2026 \$511,001.82

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## S3 - Homework 3, Part (i): No Growth Without MBA Yearly...

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