Mini-Case Emily Dao. 27. just received a promotion at work that increased her annual salary to S...

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Mini-Case Emily Dao. 27. just received a promotion at work that increased her annual salary to S XXXXXXXXXXShe is eligible to participate in her employer's 401(k) retirement plan to which the employer matches dollar-for-dollar workers' contributions up to 5% of salary. However. Emily wants to buy a new 525,000 car in three years. and she wants to have enough money to make a S7010 down payment on the car and finance the balance. Fortunately, she ex-pects a sizable bonus this year that she hopes will cover that down payment in three years.
A wedding is also in her plans. Emily and her boyfriend. Paul. have set a wedding date two years in the future, after he fin-ishes medical school. In addition, Emily and Paul want to buy a home of their own as soon as possible. This might he possible be-cause at age 30. Emily will be eligible to access a $511000 trust fund left to her as an inheritance by her late grandfather. Her trust fund is invested in 7% government bonds.
Questions 1. Justify Emily's participation in her employer's 401(k) plan using the time value of money concepts by explaining how much an investment of $10,000 will grow to in 40 years if it earns 113%. / r , . o. 2. Calculate the amount of money that Emily needs to set aside from her bonus this year to cover the down payment on a new car, assuming she can earn 6% on her savings. What if she could earn 10% on her savings? 3. What will be the value of Emily's trust fund at age 60. as-suming she takes possession of half of the money ($25,000of the $50,000 trust fund) at age 30 for a house down pay-ment, and leaves the other half of the money untouched where it is currently invested? 4. What is the relationship between discounting and com-pounding? 5. List at least two actions that Emily and Paul could take to ac-cumulate more for their retirement (think about i and n).

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David · Accepted Answer

Question: 
 Emily Dao, 27, just received a promotion at work that increased her annual salary to $37000. 
She is eligible to participate in her employer’s 401(k) retirement plan to which he employer 
matches the dollar-for-dollar worker’s contributions up to 5% of the salary. However, Emily 
wants to buy a new $25000 car in three years, and she wants to have enough money to make 
a $7,000 down payment on the car and finance the balance. Fortunately, she expects a 
sizeable bonus this year that she hopes will cover that down payment in three years.  
A wedding is also in her plans. Emily and her boyfriend, Paul, have set a wedding date in two 
years in the future, after he finishes medical school. Emily and Paul want to buy a home for 
their own as soon as possible. This might be possible because at age 30, Emily will be eligible 
to access a $50,

Mini-Case Emily Dao. 27. just received a promotion at work that increased her annual salary to S XXXXXXXXXXShe is eligible to participate in her employer's 401(k) retirement plan to which the employer...

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