Budgeting Practices Due Oct.

29, 2020

Name: Ester Intan Sukma

ID: 11190002

Mid-term Exam
(Case Study Project)

Guidelines for the take-home final exam

- Students allow to use any materials such as textbook or Internet searching to analyze the
project.
- Students must not discuss the project with other students because it is a (take-home) mid-
term exam. If any of students discuss with others, both will fail the course due to the
cheating. You must use your own words.
- The length of the answer for each case must be at least one page excluding the questions. You
need to use MS Word or Google docs to write a report.

- To complete the project successfully,

(1) Explain the situation. (read the background carefully.)
(2) Write how to analyze the case: step-by-step.
(3) Show all your analysis including calculations. If it is necessary, you can add tables or
graphs.
(4) Write your conclusion (decision) based on the above analysis. Your analysis must support
the conclusion.

1
Budgeting Practices Due Oct. 29, 2020

Q#1
(Hint: It is related to Chs.5 and 6.)

Q#2
(Hint: It is related to Chs.2 and 3.)

2
Budgeting Practices Due Oct. 29, 2020

3
Budgeting Practices Due Oct. 29, 2020

Answer:
a) For this case, the question is How much could he withdraw at year-end from that portfolio if
he wants to keep its real value intact? 
Earnings on portfolio:

($16,200 + $750) x (1+0.09)20

= $16,950 x 5.60

= $94,920

Mr. Road will receive $750 per month in social security payments, but only the 1st deposit of $750 was
counted because interest will only Imposed or worn in the investment money when the money reach
a one year maturity. The interest on 2nd, 3rd and later deposits will only be counted on the subsequent
or the next years.
Thus, yearly Earnings on portfolio would be:

$94,920/20

= $ 4,746

Hence, Mr. Road only able to withdraw $4,746 yearly from his portfolio if he wants to keep its real value
intact.