Please indicate what formulas were used to figure these calcuations.
Make the following assumption about a person and put calculations in a spreadsheet.
• Age is 40, retirement in 25 years.
• Salary is 100,000; growth rate per year is 4%.
• Interest rate is 10% (savings grow at 10%).
• A constant living standard is desired. • Inflation (CPI rate) is 3%.
• Estimated years of retirement is 20.
• To maintain standard of living during retirement, one requires 80% of non-retirement expenditure.
Instructions:
1. Calculate the stream of expenses possible with the assumed income (Hint: the PV of salary MUST EQUAL the PV of all expenses).
2. Develop a spreadsheet with clearly labeled material that is formatted to be printable on 1 page (clearly indicate the stream of salary, expenses during working life and expenses during retirement).
Please submit the spreadsheet for this scenario