FIN 4490-003: Special Topics: Financial Planning

Tennessee Tech University

Department of Economics, Finance, and Marketing
Victor Ricciardi
Instructor of Finance
Final Project Outline

Due Date: Thursday, December 8th at 10pm EST (email a copy to me at

vricciardi@tntech.edu; please email me the file directly as an attachment and not a
weblink to Google docs.)

TWO FINANCIAL PLANNING APPLICATION EXERCISES

EXERCISE #1: Potential Career Occupation, Retirement Savings Strategy, and the
Time Value of Money Concept (50% of the final project grade)
To answer this exercise, please consult the following website:
Occupational Outlook Handbook
http://www.bls.gov/ooh/
Step 1: Identify the potential occupation for the career you would seek upon
graduation for your business major.
Step 2: Describe the current employment situation, educational requirements, and
job outlook for this occupation. What is the expected job growth for your
potential career compared to other occupations? What is the annual income
(utilize the Median annual wages) for this career? Provide other information, you
believe is important.
Step 3: Develop a retirement investment plan for yourself, with the following guidelines
and assumption:
Start investing in a retirement plan (401k plan) at ages 22 to 25 for your first full-time
position after graduation from Tennessee Tech University.
For the occupation, you selected utilize the 2021 “Median Pay” as the starting salary for
an entry level position. (Remember to search by a reasonable income range for an
entry level position or take a percentage of a higher income position of the total
salary.)
Apply the general rule at retirement age that you will need 55% to 85% of your
employment salary.

What is your expected retirement age? (Number of years until retirement from age 22 to
25)

What is your expected average investment return per year?

What is your expected inflation rate per year? (Use two decimal points in your %).

1
 What is your life expectancy after retirement?

What is your required nest egg (investment objective) at retirement age?

What is the annuity amount per year you would have to save to reach the investment
goal (i.e., the amount to contribute to your 401k plan on a yearly basis)? What
percentage would this be of your overall gross salary? Is this a realistic amount to save
of your yearly salary until retirement? Are your other assumptions realistic?
Note: Provide the detailed calculations for your investment plan and sources for the data.
(See the example, I provided during my classroom illustration, make sure you develop
your own plan and calculations.)

2
EXERCISE #2: Mutual Fund Analysis (50% of the final project grade)

Review over your Morningstar Report and investigate your assigned mutual fund.
Write a brief history and describe the core investment objective of the fund. Include other
introductory information you deem important.
(Assume that the reader of this report may have not ever heard of your
mutual fund before or isn’t familiar with the particular “family of
funds.” Refer to Chapter 13: Investing in Mutual Funds in your
textbook and your notebook; incorporate specific issues that we
covered in class that apply to your mutual fund.
You will make an initial investment of $6,500 in the mutual fund on August 15, 2022, and your
taxable income this year is $160,000 as a single taxpayer. Lookup the share price (closing price)
as of August 15, 2022, for the stock at http://finance.yahoo.com
(Click on Historical Data)
Apply the formula: The Initial Investment Divided by the Share Price =
# of Shares Owned
How many shares of the stock did you purchase?

Sell the stock (all the shares) on November 15, 2022, what is the total capital gain or loss
on the stock in dollars based on the current tax law? What is the tax liability or tax
savings on this investment? What is the net tax gain or loss on this transaction?

What is your risk profile?

Survey 1: Internet exercise: What is your Investment Risk Tolerance?

Take the quiz and view the results.
https://pfp.missouri.edu/research/investment-risk-tolerance-assessment/

Survey 2: Worksheet 44: Investment Risk Tolerance

What are the actual scores from both risk surveys? Do the two risk tolerance
questionnaires classify you as the same type of risk-taker? Please explain. Also, provide a
discussion of what questions on the survey you find most relevant to your personal
assessment of risk and why?

Read over pages 355 to 357 of the “Risk Tolerance Readings” and refer to the chart on
page 9 of my handout “Socioeconomic Differences in Risk Attitudes” about the notion of
risk tolerance; incorporate the themes of this discussion to the results of whether you are:
1) Conservative Investor; 2) Moderate Investor; 3) Aggressive Investor

Overall Risk Assessment: How does the mutual fund’s beta compare with your risk
tolerance category? Is this mutual fund a good fit based on your risk tolerance category?
Please explain. (Note: Risk tolerance category is 1) Conservative Investor; 2) Moderate
Investor; 3) Aggressive Investor)

3
How has your mutual fund performed since January 1, 2022? In other words, what’s the year-
to-date performance of your mutual fund? How has your mutual fund performed compared to
certain indexes such as the S&P 500 index, the Dow Jones, and the NASDAQ index for 1 year
ago? 5 years ago? (Incorporate a graph from Yahoo Finance.)

Give a description of the Investing Process and what you learned from this project.
-- Your investment decision: Based on the performance of your mutual fund,
would you sell, hold, buy more, or buy something else and what? Explain in
detail. Note: Utilize information from the Morningstar Report to support you’re
investment decision.

Citation Guidelines: For the final project, utilize an MLA or APA or other citation
style. Please cite (refer to a source) when you paraphrase or direct quote an item.
In other words, when you direct quote a source put it in “quotes”. Include a
Bibliography (Reference) section.

For financial information (numbers and data) from the Moringstar report you do
not have to follow citation guidelines.

Note: The report should be typed in Microsoft Word and submitted in a

professional “high quality” format.

Grading of Project:

You will be graded on the quality of work such as creativeness, originality, neatness,
overall organization of project, and completeness of worksheets and accuracy of issues
stated within this outline. Also, projects will be evaluated on the requirements stated
within the outline and each question has been assigned a point value. Also, consult the
Section “An Overview of Grade Criteria for the Final Project” for further
explanation.

An Overview of Grade Criteria for the Final Project

4
The following criterion represents the logic, which the professor uses to evaluate the
final project. The category which best describes the work is the grade. Keep this sheet
to reflect on the point value, which the instructor assigns as the grade evaluation
component for the Final Project Report.

Grade Evaluation Criteria

A (90% to 100%) * Facts and computations are accurate and exceptionally presented.
* Format and method of presentation are exceptionally clear and
professionally done.
* Interpretation, is clear, concise, and accurate.
* Summary/conclusions/recommendations, clearly indicates the nature
of the problem, the pertinent facts, logical conclusions based in fact,
tenable recommendations, and a defended decision.
* All problems/issues in the final project are exceptionally addressed.

B (80% to 89%) * Facts and computations are accurate

* Format and method of presentation are clear and professionally done.
* Interpretation is clear, concise, and accurate.
* Summary/conclusions/recommendations clearly indicate the nature of
the problem, the facts, and conclusions based in fact, tenable
recommendations, and a defended decision.
* All problems in the case are adequately addressed.

C (70% to 79%) * Facts and computations are accurate

* Format and method of presentation are clear
* Interpretations are attempted but vague.
* Summary/conclusions/recommendations address the pertinent problems
* Basic issue is addressed

D (60% to 69%) * Lack of accuracy or completeness in facts or computations exist.

* Format and method presentation lack professional quality

F (Below 60%) * Interpretation of the financial data is poor

* Summary/conclusions/recommendations are incomplete or
inaccurate
* Not all problems are adequately addressed
* Facts/computations contain errors
* Format or method of presentation is inappropriate or of poor quality
* No interpretation of the problem is made
* Summary/conclusions/recommendations are not made or are not
supported