Fin 4340 Ad Fin

Case 2 It’s Better Late Than Never

Participation Questions

Name: _______Timothy Hart___________ Date: ________3/19/20_________

1- Describe how you would find Ryan’s starting salary. What process would you use?
Solve for the initially salary by knowing it grows by 5% annually and work backwards

2- How would you determine the amount Ryan could have contributed to his savings plan in his
first year?
Multiply his salary times the rate allowed which is 11% then multiply that by 2 in order to get the total
since the company will match his amount saved.

3- What key pieces of information do you need to answer question 2 in the book? What would you
do with that info?
You need the salary for each year which you would then be able to calculate the total saved amount
and what the amount would be if invested.

4- As you work through the balances accumulating in Ryan’s savings plan, there is a key point that
involves contributions. What happens at that key point? What is the dollar amount of salary at
which that occurs? Show your work!
The maximum contribution is $12000 which is reached when his salary is $114,022.62. So the
contributions Ryan can make from then on are only $12,000 with a additional match of $12,000 from
his company.