Case Problem $1$: Four Corners

What will your investment portfolio be worth in $10$ years? In $20$ years? When you stop

working? The Human Resources Department at Four Corners Corporation was asked to

develop a financial planning model that would help employees address these questions.

Tom Gifford was asked to lead this effort and decided to begin by developing a personal

financial plan. Tom has a degree in business and, at the age of $40,$ is making $$85,000$ per

year. Through contributions to the company$$s retirement program and the receipt of a small

inheritance, Tom has accumulated a portfolio valued at $$50,000.$ Tom plans to work $20$

more years and hopes to accumulate a portfolio valued at $$1,000,000.$ Can Tom do it$?$

Tom began with a few assumptions about future salary, new investment contributions,

and the portfolio growth rate. Tom assumed a $5\%$ annual salary growth rate and plans to

make new investment contributions at $6\%$ of the annual salary. After some research on

historical stock market performance, Tom decided that a $10\%$ annual portfolio growth rate

was reasonable. Using these assumptions, Tom developed the following Excel worksheet:

The worksheet provides a financial projection for the next five years. In computing the

portfolio earnings for a given year, Tom assumed that their new investment contribution