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Date Posted: 20:13:15 03/14/02 Thu
Author: jimmahar@FinanceProfessor.com
Subject: Assignment for 301, second try



Ok I'll try again...(third time!)

Assignment – due before Easter Break (2 parts)

1. You just won the lottery! Congratulations!
How much must you have won in order that you need not work?

2. Sorry, you did not win the lottery, but you did go to school and you got a job. Now you have to set up a savings plan that will allow you to retire by __________ (your choice).


While both seem to be quite simple, the thought and work that goes into the answer will likely prove to be anything but simple.

FOr example, you will have to determine your living expenses in both scenarios. This is no simple feat as you will have to determine where you are living (i.e. approximate value of house), taxes, inflation, etc.), how long you expect to live, what you plan on doing with the money etc.

Additionally you will have to determine how you plan on investing your money. (As a hint you will want to be diveresified!)

THus what seemed a very simple question may be very difficult.

You will be expected to turn in a two page write up as well as supporting documentation and any assumptions that you have made. I would expect that much of the supporting documentation (you tell me how much is enough, but assume I have no clue at all and you have to show me the necessary math etc that will convince me your plan is sufficient).

State assumptions and show and document all calculations (including showing *all* sources (including web links where appropriate).


I think this should become a valuable training tool that I have no doubt you will use (ar least mentally) hundreds of times over the course of your life.


Feel free to share helpful links with each other on this page (in fact I will look at them and also include on the actual class page links that you think might help others. (For example: Kiplinger.com has some valuable calculators that may help--It is not sufficent to say I need $X since Kiplinger says so!)



good luck, be creative, and have fun!!

jim

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