Finance 605 mini projects

Topics: Time value of money, Net present value, Finance Pages: 5 (613 words) Published: July 26, 2014
 Unit 1 – Case Analysis- “The Time Value of Money: Natasha Kingery Case.” FIN 605 – Financial Economics
Dr. Professor
February 24, 2012
University

Introduction
Here is a case about  Natasha Kingery, 30 years old and has a Bachelor of Science degree in computer science. She is currently employed as a Tier 2 field service representative for a telephony corporation located in Seattle, Washington, and earns, $38,000 a year that she anticipates will grow at 3% per year. Natasha hopes to retire at age 65 and has just begun to think about the future.  Natasha has $75,000 that she recently inherited from her aunt. She invested this money in 10-year Treasury Bonds. She is considering whether she should further her education and would use her inheritance to pay for it. The objective of this case is to show the options for Natasha, so she can make intelligent decisions whether she will remain in her current job, take certifications or MBA degree. This paper should be able to answer the following questions: 1. Determine the interest rate she is currently earning on her inheritance by going to Yahoo Finance; 2. Create a timeline in Excel for her current situation as well as the certification program and MBA degree; 3. Calculate the present value of the salary differential for completing the certification program; 4. Calculate the present value of the salary differential for completing the MBA degree;

5) Based on your answers to Questions 3 and 4, what advice would you give to Natasha? Would your advice be different?

Answers:
1) Referring from Yahoo.com, the interest rate for June 1, 2009 is 3.71%. 2) Below is the timeline in Excel showing Natasha’s current situation as well as the certification program and MBA degree options: Year

Current Job
Certification
MBA
1
38,000.00
38,000.00
38,000.00
2
39,140.00
49,140.00
39,140.00
3
40,314.20
50,614.20
40,314.20
4
41,523.63
52,132.63
61,523.63
5
42,769.33
53,696.60
63,369.33
6
44,052.41
55,307.50
65,270.41
7
45,373.99
56,966.73
67,228.53
8
46,735.21
58,675.73
69,245.38
9
48,137.26
60,436.00
71,322.74
10
49,581.38
62,249.08
73,462.43
11
51,068.82
64,116.55
75,666.30
12
52,600.89
66,040.05
77,936.29
13
54,178.91
68,021.25
80,274.38
14
55,804.28
70,061.89
82,682.61
15
57,478.41
72,163.75
85,163.09
16
59,202.76
74,328.66
87,717.98
17
60,978.84
76,558.52
90,349.52
18
62,808.21
78,855.27
93,060.00
19
64,692.46...

References: Yahoo.com
http://yahoo.com/finance
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