W2 discussion FIN4035
TVM Considerations and Market Research Excel Spreadsheet Needed Part One: Time Value of Money Considerations You are planning to retire in 20 years and you would like to have an amount equal to the purchasing power of $1,000,000 cash today, in the bank on the day you retire.
Currently, your bank account has a balance of $21,645.82 and pays 8% compounded annually. You plan to make a deposit each month beginning one month from today and continuing until the day you retire.
Required:
How much money will you need to have in the bank 20 years from now if inflation is expected to average 4% per year? How much will your monthly deposit have to be in order to reach your goal? If you make your first deposit today, how much must your monthly deposit be to reach your goal? Part Two: Market Research You are considering an investment in IBM. Go to www.finance.yahoo.com (or any other site of your choice) and take the monthly stock price and dividend data for IBM for the last eight years.
Calculate the quarterly capital gain returns, dividend returns and total returns. Also, take the quarterly price data (adjusted for dividends) for the S&P 500 index. Calculate the standard deviation of returns for IBM and the S&P 500 index.
Required:
Based on your analysis, which of the two investments is better? Explain your answers and show your calculations.
TVM Considerations and Market Research
Excel Spreadsheet Needed
Part One: Time Value of Money Considerations
You are planning to retire in 20 years and you would like to have an amount equal to the purchasing power of $1,000,000 cash today, in the bank on the day you retire.
Currently, your bank account has a balance of $21,645.82 and pays 8% compounded annually. You plan to make a deposit each month beginning one month from today and continuing until the day you retire.
Required:
How much money will you need to have in the bank 20 years from now if inflation is expected to average 4% per year?
How much will your monthly deposit have to be in order to reach your goal?
If you make your first deposit today, how much must your monthly deposit be to reach your goal?
Part Two: Market Research
You are considering an investment in IBM. Go to www.finance.yahoo.com (or any other site of your choice) and take the monthly stock price and dividend data for IBM for the last eight years.
Calculate the quarterly capital gain returns, dividend returns and total returns. Also, take the quarterly price data (adjusted for dividends) for the S&P 500 index. Calculate the standard deviation of returns for IBM and the S&P 500 index.
Required:
Based on your analysis, which of the two investments is better? Explain your answers and show your calculations.
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