385 Managerial Finance Case Study 1-1
Project Summer II B01, created by Eric Disbrow, MSF © 2016
Instructions for the Case Study:
1. This project is to be completed within your group only. Working with other groups is not allowed.
2. Please utilize excel template provided to calculate all your answers. You can use excel or this word document for your short answers.
3. In order to receive full or partial credit you must show your formulas within your Excel spreadsheet. You will have examples of the formulas in class and on the slide presentations as well as in the text.
Academic Honesty:
1. By writing our names below, we agree that all the work which appears in the Excel file and on this Word document is entirely our own groups, we have not used online solutions, other classes solutions or other groups solutions.
2. We fully understand the academic policies of Bridgewater State University and will accept a 0 on this project if the policy is not adhered to.
1. Print Name: 2. Print Name:
1. Signature: 2. Signature:
3. Print Name: 4. Print Name:
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5. Print Name: 5. Signature:
385 Managerial Finance Case Study 1-1
Project Summer II B01, created by Eric Disbrow, MSF © 2016
Retirement Case Study:
In June of 2016 John Dempsy, CIU was introduced to a client by the name of Dr. Carl and Mary
Littlefield. An estate planning attorney introduced the couple to John. The purpose of the meeting
was for financial planning. Dr. and Mrs. Littlefield were in a flux. They hadn’t saved very much
for retirement and found that they didn’t know where they were going financially and how much
they would have. They were in luck as Mr. Dempsy was just the person to help. Dempsy asked
the couple numerous questions regarding their current financial situation. He asked them their
ages, income and expected raises annually, years until retirement, and their tendency towards risk.
Were they risk seeking, risk neutral or risk adverse? This helps Dempsy in determining the
riskiness of the investment portfolio and what types of returns to expect.
After interviewing the couple for an hour the following information is what Mr. Dempsy found.
2016 Information Carl’s Mary’s Income per year $125,000 $68,000 Expected annual raises 3.5% 2.5% Savings Rate for 401k % of income for next 15 years 10% 10% Savings Rate for 401k % of income for the years remaining until retirement 15% 15% Age 35 yrs. old 35 yrs. old Years Until Retirement 30 Years 30 Years Current Retirement Savings $110,000 $75,000 Risk Tolerance Risk Neutral Risk Adverse Expected life expectancy 78 Yrs. 92 Yrs. Rate of Return During Savings Period 10.25% 6.5% Return During Retirement 4% 4% Inflation 3.3% 3.3%
Please use provided spreadsheet to calculate and answer the questions.
