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Problem Day Test 1 Prep

# Problem Day Test 1 Prep - ProblemDay:Test1 Review...

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Problem Day: Test 1  Review

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Housekeeping Items Test available Thursday and Friday o You must have the test in hand no later than 5pm on Friday!!! o No time limit on the exam.  Take your time and get it right. No POW Quiz this week.  No POW Review this week. Extra Test Review tonight (Wednesday) from 5-7pm in  room 151 TNRB Ch. 6 Reading Quiz due Monday morning at 8am
Today’s Agenda Review Q&A

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What’s Important to      the  Professor???
Sample of Things to Know  (a teaser) Equation for Free Cash Flow Time Value of Money Calculate DFN Calculate AND Use ALL Ratios  Calculate Cash Flows Retained Earnings Equation Credit standards = How you collect your accounts  receivable (tighten vs. loosen) Traditional vs. Roth IRA Cash Budget

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Personal Retirement Plan 1. Decide how much income you will need in today’s  dollars (i.e., if you were retiring today). Todd needs: \$60,000
Personal Retirement Plan 1. Decide how much income you will need in today’s  dollars (i.e., if you were retiring today). 2. Estimate inflation; you may want to investigate the  impact of several different rates, but good guesses  would be 2%, 2.5% and 3% Todd estimates: 2.5%

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Personal Retirement Plan 1. Decide how much income you will need in today’s  dollars (i.e., if you were retiring today). 2. Estimate inflation; you may want to investigate the  impact of several different rates, but good guesses  would be 2%, 2.5% and 3% 3. Calculate the amount of annual income you will need  when you get ready to retire given the inflation  estimates in step 2 (i.e, the FV of step 1)
Annual Income I’ll need (in  retirement dollars) Years until I retire: 40 PV = \$60,000 I/YR = 2.5% N = 40 PMT = 0 FV = ? Value of \$60,000 in 40 years, inflation adjusted, is \$161,104

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Age Desired Income (inflation adjusted) Age 65 \$161,104 Age 66 \$165,131 Age 67 \$169,260 Age 68 \$173,491 Age 69 \$177,828 Age 70 \$182,274 Age 71 \$186,831 Age 72 \$191,502 Age 73 \$196,289 Age 74 \$201,197 Age 75 \$206,227 Age 76 \$211,382 Age 77 \$216,667 Age 78 \$222,083 Age 79 \$227,635 Age 80 \$233,326 Age 81 \$239,160 Age 82 \$245,139 Age 83 \$251,267 Age 84 \$257,549 Age 85 \$263,987
Personal Retirement Plan 1.

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