Simulate Amanda's Portfolio Over the Next 30 Years and Determine

question 58

Essay

Simulate Amanda's portfolio over the next 30 years and determine how much she can expect to have in her account at the end of that period.At the beginning of each year,compute the beginning balance in Amanda's account.Note that this balance is either 0 (for year 1)or equal to the ending balance of the previous year.The contribution of $5,000 is then added to calculate the new balance.The market return for each year is given by a normal random variable with the parameters above (assume the market returns in each year are independent of the other years).The ending balance for each year is then equal to the beginning balance,augmented by the contribution,and multiplied by (1+Market return).Suppose Amanda will stop investing in the stock market and transfer all of her retirement into a savings account if and when she reaches $500,000.When can she expect to reach this goal?

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Definitions:

Cost Calculation

The process of determining the total cost incurred to produce goods or deliver services, factoring in both direct and indirect expenses.

Inventory Turnover

A proportion demonstrating the rate at which a company's goods are sold and then replenished over an interval.

Cost of Goods Sold

Direct costs tied to the process of producing goods a company puts up for sale, inclusive of labor and materials.

Average Inventory

A means of measuring the approximate amount of inventory a company holds over a certain period, aiming to balance holding costs against stockout risks.