Suppose an employee starts working after completing her MBA at age 30 at a starting salary of $50,000. She expects an annual salary increase to be at minimum 1%, at maximum 5%, with a uniform
distribution. Her retirement plan requires that she contribute 8% of her salary, and her employer matches that by adding an additional 35% of her contribution. She anticipates an annual return on her retirement portfolio (i.e., return on investment) to be a normal distribution with a mean of 4% and standard deviation of 3.5%. She plans to retire at age 60. Create a spreadsheet model to forecast her average return on investment (i.e., retirement account balance) when she retires at age 60 based on 5,000 simulation trials.
1) What is the expected average balance of her retirement account when she retires at age 60? 2) What is the probability that her ending retirement balance at age 60 will be over $450k?
Generate a histogram or density chart that shows this.
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