Reference no: EM131306759
The purpose of this exercise is to familiarize you with the wide variety of personal finance resources on Yahoo!. Go to finance.yahoo.com/personal-finance.
a. Determine how inflation and taxes will affect your investments. Assuming a before-tax return on your savings of 8%, a state marginal tax rate of 5%, a federal marginal tax rate of 25%, no itemized deductions, and an annual inflation rate of 3%, what would a $10,000 investment be worth in 10 years? What would be the equivalent purchasing power of this same $10,000 investment?
b. Return to finance.yahoo.com/personal-finance. Determine how much you could save in 10 years if you stopped buying soft drinks from a vending machine. Assume you currently spend $35 per month on soft drinks and you could invest this money at a rate of return of 8%.
c. Determine what your loan payment would be if you borrowed $30,000 at 6% for 60 months and made monthly payments. For your 10th payment, how much of the loan payment would be interest? (Hint: Find the loan amortization table.)
d. You can use a calculator to determine how much you will need to save for retirement. Assuming an inflation rate of 3%, a desired retirement age of 65, 30 years of retirement income, income replacement of 100%, and returns both pre- and post-retirement of 8%, use your current age and other current information to compute how much you will need to save for retirement. (Hint: If you are not currently working and have no income, use your estimated income upon graduation.) Make this calculation both including and excluding Social Security.
e. You can use a calculator for real estate problems such as determining how much your monthly mortgage payment would be for a particular mortgage loan that you wish to obtain.
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