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You have just graduated USC and are starting you new job as financial analyst. Here...

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Finance

You have just graduated USC and are starting you new job as financial analyst. Here are a few details:

  • You are 25 years old and plan to retire at age 65
  • Your starting salary is $60,000 per year
  • You expect to receive annual increases of 3%
  • Assume all 401k contributions are done once per year on January 1
  • You have the following funds available to you in your 401k plan:
    1. Vanguard Total Stock Market Index VTSAX
    2. Vanguard Total International Stock VTIAX
    3. Vanguard Total Bond VBTLX
    4. Vanguard Total Global Bond VGCIX

Please answer the following questions:

  1. Assume that you allocate 100% to VTSAX until age 40. Then you allocate 50% to VTSAX and 50% to VBTLX until age 65. Based on historical performance for each fund (use Inception to Date), what will be your balance at age 65? Assume no company match.

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