Susan Sarandon, who graduated from the UTSC BBA program, a year ago, lives with her parents, who do not charge her for rent or food. She works at TEVA pharmaceutical, and her take home pay is $4000 per month after taxes and other deductions. She expects her take home pay to rise at 4% per year for the next several years. She has to start paying off her student loan of $40,000. The interest rate on the loan is 4.8% per year compounded monthly and amortization period is 6 years. She would like to purchase a car and the entire $25,000 purchase price of the car will be financed at 6% per year compounded monthly amortized over 4 years. She has $600 per month of expenses which her parents do not pay, like transportation, clothes, entertainment. This cost will rise at 3% per year. Two years from now, she will travel to Denmark to attend her sister’s wedding. This trip will cost her $10,000 in travel, clothes and gifts. Four years from now, she will go on African safari at a cost of $15,000. She will invest her savings in interest earning securities earning before tax rate of return of 0.4% per month. Her marginal tax rate is 40%.
a.How much will Susan have saved at the end of 4 years?
b.What does the answer to part (a) tell you that she should be doing with her financial management
to be most efficient with her money, while not sacrificing any consumption?
I need a complete solution for this question please.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more