EXCEL ICW #5
You are a staff accountant at Best & Collins, a CPA firm located in downtown San Diego. A long-time client, Kevin Gill, has contacted you with a request. Kevin is 45 years old, is beginning to think about saving for retirement, and has some questions. He is confused about the differences between a Roth IRA and a Traditional IRA and needs your advice. He wants you to prepare an Excel model that he can use to test the differences in a Traditional versus Roth IRA. Based on your discussion with Kevin, the Excel model should cover a ten-year period. Your model should be comprised of the following parts:
Part 1 Input Section
Kevin would like to be able to change the following items in the model:
1. Year analysis begins
2. Amount of the IRA contribution (only one contribution in this analysis – not one per year)
3. Tax rate at date of contribution (assume the contribution is made on January 1 of the initial year)
4. Annual growth rate (constant growth throughout the analysis period)
5. Tax rate at date of withdrawal (assume entire account balance withdrawn at end of tenth year)
Prepare an input section where Kevin can enter different values for the five variables listed above. It doesn’t matter what values you leave in the sections, only that when they are changed Parts 2 and 3 of the model are updated automatically.
Part 2 Tables for Roth & Traditional
Prepare one table showing the Roth IRA and one showing Traditional IRA balances over a ten-year period.
The balances should grow by the growth rate and should reflect the taxes at contribution and withdrawal as appropriate for the IRA type. All of these values should change when inputs from Part 1 change.
Part 3 Graph Showing Roth & Traditional Balances Year-Over-Year
Prepare a graph/chart showing the account balance at each year-end for the Roth and Traditional IRAs. The final year data point should be the net of tax amount of the distribution. The lines on the graph should move as inputs from Part 1 are edited (which would also affect the values in Part 2).
Part 4 Client Note
Prepare a note to Kevin explaining the main differences in the two IRA’s, and what factors might make one preferable over the other. This note should be typed out in your Excel model and formatted well.
Remember, professional presentation includes proper titles and headings, is centered on the page when printed, and is a reasonable size on the page. You should have nice headers and an overall clean look –impress me! Test the appearance of the worksheet by using the print preview function in Excel.
Professional appearance is important so don’t overlook this part of the assignment. Make sure your
Excel file is uploaded to Canvas by 7PM of Week 15 class date, no exceptions. Do not upload a PDF, must be an Excel file.
