Financial Auditing: Breakdown of Earnings and Spendings

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Financial Project 2
1) Introduction: As an Ivy Tech student, you are making an investment in your education. This project will look at how that investment will pay off if you graduate and get a job in your desired field. Explain this to the reader.
2) Income Comparison: Research your expected income after you graduate. Assume you obtain whatever level of education needed to enter your desired area of employment. We recommend using the annual Median salary found at: http://www(dot)bls(dot)gov/oes/current/oes_in.htm#27-0000 *You will need to click on your desired career to see the Annual Median wage. If using a different source, you must cite it. Then compare your future finances with someone who is an unskilled worker, assuming they earn $22,8880 annually.
• Your reflection paper should explain your desired area of employment and what the median annual salary for that position is. Explain why you chose this field.
• Your reflection paper should compare your expected salary with that of the unskilled worker using absolute and relative change (but don’t use those words!).
3) Loan Comparison (choose vehicle or house): With your post-graduation income, you can afford to either purchase a home or buy a vehicle. You can either spend 25% of your gross monthly income on house payments, or 10% of your monthly income on a car payment. Research the current fixed rate APR for a 30-year mortgage or a 5-year auto loan and use Excel to determine either the largest value of a house mortgage or car loan that you can afford to borrow under those conditions. If your unskilled worker counterpart spends the same portion of their income using the same loan, what can they borrow?
• Your reflection paper should state the absolute and relative change (but don’t use those words!) comparing the value of the house or vehicle that a high school graduate can afford compared to what you can expect to afford.
• Explain in your reflection paper how Excel was used for these calculations. Do not use cell references in your paper. Cite what source you used to find loan rates.
• Research either available houses where you would like to live, or a vehicle you would like to purchase. Are you able to find a house or vehicle in your price range? Cite what source you used to find housing or vehicle costs. Include pictures if desired.
4) Retirement Comparison: It is wise to set aside 10% of gross monthly income for 401 k investment. Assume the investment earns a 10% annual return. In addition, your future employer will match 10% of your 401 k investment, while the unskilled worker’s employer will not match. Use Excel to determine the balance after 30 years for the unskilled worker and for your expected income.
• Your reflection paper should compare the value of the 401 k investment of the unskilled worker and for your expected salary using absolute and relative change.
• Explain in your reflection paper how Excel was used for these calculations.
• Your reflection paper should contain at least one statement of whether this 30-year balance is feasible for you to live on when you retire.
5) Retirement Comparison Part 2: Consider the retirement investment provided above. Which scenario (A or B) will give you the best value for retirement? For each scenario, find the relative change from the original college grad retirement amount to the changed amount.
• A. If you were to double the contribution into the account (from 10% to 20%) with the initial APR and years, how much would you have in your retirement account?
• B. If you were to increase the time that you are investing from 30 years to 40 years, how much would you have in your retirement account?
Your reflection paper should discuss which factor has the biggest influence on the retirement account balance. With this knowledge, how would you personally design your retirement plan assuming an APR of 10%? Keep in mind the number of years you want to work, and the amount you can contribute. How much would be in your retirement account when you are ready to retire? Do NOT use A or B!
6) Conclusion: Is this a good investment? Will it pay off? Explain this to the reader.
Project Checklist:
• Paper must contain relative change statements without using the words “relative change”.
• Explanation of career choice and the salary for this career.
• Comparison of your expected salary vs. unskilled worker (absolute and relative change)
• Comparison of house or vehicle you could afford with expected salary vs. unskilled worker
• Explanation of how house or vehicle value was determined.
• Reflection on the housing or vehicle costs and researched house or vehicle values.
• Explanation of how the 401k value is determined.
• Comparison of monthly investment amounts for you and employer for your expected salary vs unskilled worker, in addition to 30-year account balance (absolute and relative change).
• Explanation of how you could achieve that retirement fund.
• Paper should be free of grammatical and mechanical errors.
• Completed project should be submitted via Ivy Learn on time in a readable format file.
In addition to addressing the statements above, your project should:
• Contain your name, course name and project name.
• The paper should be in paragraph form with an introduction, main body and conclusion (not just bulleted answers!).
• Be clear to by someone who is not familiar with the project.
• Provide support for your statements e.g. explain how values were found. Do not use cell references!
• Give specific values (i. e. quantify statements).
• Use appropriate representations (tables, color) that helps the reader understand the project.
• Project should be your original individual work. Copying someone else’s work is cheating. Sharing your work with someone else is cheating.
Submit both an Excel and Word file following your instructor’s directions for submission.
Points 0 1 2 3 4
Income
- Area of employment
- Why did you choose this job
- Median salary
- Absolute & relative diff between 2 incomes None of the items are present. 1 of the items was properly addressed. 2 of the items were properly addressed. 3 items were properly addressed. All 4 items were properly addressed in complete sentences.
House OR Car
- Found College Grad (CG) and Unskilled Worker (UW) monthly income
- Explanation of portion of income allotted to house/car
- Find CG & UW house/car value using APR
- Abs & relative difference between house/car None of the items are present. 1 of the HS/CG items completed. 2 of the HS/CG items completed. 3 HS/CG items were properly addressed. All 4 HS/CG items were properly addressed.
Retirement
- CG and UW 30-year balance
- CG and UW monthly investments
- CG and UW employer monthly investments
- Abs & relative diff between 401k balances None of the items are present. 1 of the HS/CG items completed. 2 of the HS/CG items completed.
3 HS/CG items were properly addressed. All 4 HS/CG items were properly addressed.
Retirement (Part 2)
-Found values for scenarios A,& B w/function
- Found relative diff btwn changed value & orig
- Discuss factor with biggest influence
- Explain changes to formula (years, $ invested) and final retirement account balance None of the items are present. 1 of the items was properly addressed. 2 of the items were properly addressed. 3 items were properly addressed. All 4 items were properly addressed and clearly communicated
Reflection
- Explain how calculations were made for house/car and 401k
- Reflect on house/car costs in area you want to live and if your salary will allow you to find something suitable in your price range or if other options should be considered
- Reflect on 30-yr balance of 401k and if this value meets your expectations or if you need to change your investment strategy
None of the items are present.
1 of the items was properly addressed.
2 of the items were properly addressed.
3 items were addressed but not clearly understood.
All items were properly addressed and clearly communicated
Specifications
- At least one page, double-spaced
- Spelling/grammar
- Cited sources for APR & house/car cost
- Turn in Excel spreadsheet with formulas
None of the items are present.
1 of the items was present.
2 of the items were present.
3 of the items were present.
All 4 items were present.
Organization
- Logical
- Has introduction, main body, conclusion
- Easily understood Poor Below Average Average Above Average Excellent