Problem Day Test 1 Prep

Problem Day Test 1 Prep - Problem Day: Test 1 Review...

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Unformatted text preview: Problem Day: Test 1 Review 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 Todays Agenda Review Q&A Whats 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 Personal Retirement Plan 1. Decide how much income you will need in todays dollars (i.e., if you were retiring today). Todd needs: $60,000 Personal Retirement Plan 1. Decide how much income you will need in todays 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% Personal Retirement Plan 1. Decide how much income you will need in todays 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 Ill 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 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. Decide how much income you will need in todays dollars (i.e., if you were retiring today).dollars (i....
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Problem Day Test 1 Prep - Problem Day: Test 1 Review...

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