Question: Five years ago, you purchased seven corporate

> How much money can they gift to their children in 2020 without any gift tax liability?

> In 2020, you gave a $15,000 gift to a friend. What was the gift tax in 2020? (LO 14.4)

> What will be the gift tax in 2020?

> What is the total amount removed from Joshua’s estate in 2020?

> Shelly's assets include money in checking and saving accounts, investments in stocks and mutual funds, personal property, such as furniture, appliances, an automobile, coin collection and jewelry. Shelly calculates that her total assets are $165,200. H

> Using the "nonworking" spouse method, what should be the life insurance needs for a family whose youngest child is 5 years old? (LO10.1)

> Using the "nonworking" spouse method, what should be the life insurance needs for a family whose youngest child is ten years old? (LO10.1)

> Jamie Lee’s father suggested that they purchase stock in a company that he has held shares in for decades. They want to take advantage of the stock tip, but Jamie Lee and Ross are trying to decide between purchasing the company’s common stock and prefer

> You are a dual income, no-kids family. You and your spouse have the following debts (total): mortgage, $200,000; auto loan, $10,000; credit card balance, $4,000; and other debts of $10,000. Further, you estimate that your funeral will cost $8,000. You

> Mark and Parveen are the parents of three young children. Mark is a store manager in a local supermarket. His gross salary is $75,000 per year. Parveen is a full time stay-at-home mom. Use the easy method to estimate the family's life insurance needs

> Use Exhibit 10-1 to find the average number of additional years a 25-year-old male and female are expected to live, based on the statistics gathered by the U.S. government as of 2017 (LO10.1)

> Use the Figure It Out worksheet in this chapter to calculate your own life insurance needs. (LO10.1)

> Shaan and Anita are married and have two children, ages 4 and 7. Anita is a “nonworking” spouse who devotes all of her time to household activities. Estimate how much life insurance Shaan and Anita should carry. (LO10.1)

> You and your spouse are in good health and have reasonably secure careers. Each of you makes about $55,000 annually. You own a condominium with an $120,000 mortgage, and you owe $15,000 on car loans, $5,000 on personal debts, and $4,000 on credit card

> Shelly’s variable annuity has a mortality and expense risk charge at an annual rate of 1.25 percent of account value. Her account value during the year is $50,000. What was Shelly’s mortality and expense risk charge for the year? (LO10.4)

> Sophia purchased a variable annuity contract with a $25,000 purchase payment. Surrender charges begin with 7 percent in the first year, and decline by 1 percent each year. In addition, Sophia can withdraw 10 percent of her contract value each year with

> Your variable annuity charges administrative fees at an annual rate of 0.15 percent of account value. Your average account value during the year is $200,000. What is the administrative fee for the year? (LO10.4)

> You are the wage earner in a “typical family,” with $58,000 gross annual income. Use the easy method to determine how much insurance you should carry. (LO10.1)

> What are the advantages and disadvantages of investing in a technology company’s IPO? Will they be guaranteed a large return from this investment? At this life stage would you recommend that Jamie Lee and Ross invest in an IPO? Why or why not?

> In 2007, Joelle spent $5,000 on her health care. If this amount increased by 6 percent per year, what would be the amount Joelle spent in 2017 for the same health care? (Hint: Use the Time Value of Money Table in Chapter 1 Appendix, Exhibit 1-A) (LO9.

> If Ronald selects the POS plan, what will his annual medical costs be? (LO9.2)

> What total costs will Ronald pay if he enrolls in the HMO plan? (LO9.2)

> What annual medical costs will Ronald pay using the sample medical expenses provided if he enrolled in the Blue Cross/Blue Shield plan? (LO9.2)

> Stephanie was injured in a car accident and rushed to the emergency room. She received stitches for a facial wound and treatment for a broken finger. Under Stephanie’s PPO plan, emergency room care at a network hospital is 80 percent covered after the

> Georgia, a widow, has a take-home pay of $1,200 a week. Her disability insurance coverage replaces 70 percent of her earnings after a four-week waiting period. What amount would she receive in disability benefits if an illness kept Georgia off work for

> Becky’s comprehensive major medical health insurance plan at work has a deductible of $750. The policy pays 85 percent of any amount above the deductible. While on a hiking trip, she contracted a rare bacterial disease. Her medical costs for treatment, i

> A health insurance policy pays 65 percent of physical therapy cost after a $200 deductible. In contrast, an HMO charges $15 per visit for physical therapy. How much would a person save with the HMO if he or she had 10 physical therapy sessions costing $5

> In 2012, per capita spending on health care in the United States was about $9,000. If this amount increased by 7 percent a year, what would be the amount of per capita spending for health care in 8 years? (Hint: Use the Time Value of Money Table in th

> The Tucker family has health insurance coverage that pays 80 percent of out-of-hospital expenses after a $1,000 deductible per person. If one family member has doctor and prescription medication expenses of $2,200, what amount would the insurance pay? (L

> Jamie Lee and Ross agree that by accomplishing their short goals, they can budget $7,000 a year towards their long-term investment goals. They are estimating that with the allocations recommended by their financial advisor, they will see an average of 7

> Shaan and Anita currently insure their cars with separate companies, paying $650 and $575 a year. If they insure both cars with the same company, they would save 10 percent on the annual premiums. What would be the future value of the annual savings o

> In the preceding example, assuming their insurance rates remain the same, how many years will it take Dave and Ellen to earn back in discounts the cost of the deadbolts? (LO8.2)

> Dave and Ellen are newly married and living in their first house. The yearly premium on their homeowner’s insurance policy is $450 for the coverage they need. Their insurance company offers a 5% discount if they install deadbolt locks on all exterior doo

> When Carolina's house burned down, she lost household items worth a total of $50,000. Her house was insured for $160,000 and her homeowners' policy provided coverage for personal belongings up to 55 percent of the insured value of the house. Calculate h

> Karen and Mike currently insure their cars with separate companies paying $700 and $900 a year. If they insure both cars with the same company, they would save 10 percent on the annual premiums. What would be the future value of the annual savings over t

> Kurt Simmons has 50/100/15 auto insurance coverage. One evening he lost control of his vehicle hitting a parked car and damaging a store front along the street. Damage to the parked car was $5,400 and damage to the store was $12,650. What amount will the

> Becky Fenton has 25/50/10 automobile insurance coverage. If two other people are awarded $35,000 each for injuries in an auto accident in which Becky was judged at fault, how much of this judgment would insurance cover? (LO8.4)

> Assume you are in the 35 percent tax bracket and purchase a 3.20 percent municipal bond. Use the formula presented in this chapter to calculate the taxable equivalent yield for this investment. (LO11.4)

> Assume you are in the 24 percent tax bracket and purchase a 2.90 percent municipal bond. Use the formula presented in this chapter to calculate the taxable equivalent yield for this investment. (LO11.4)

> Use the information in the Figure It Out! box earlier in this chapter to complete the following table.

> Jamie Lee and Ross need to evaluate their emergency fund of $21,000. Will their present emergency fund be sufficient to cover them should one of them lose their job?

> Jane and Bill Collins have total take-home pay of $5,400 a month. Their monthly expenses total $4,250. Calculate the minimum amount this couple needs to establish an emergency fund. (LO11.1)

> Bob Orleans invested $3,000 and borrowed $3,000 to purchase shares in Verizon Communications. At the time of his investment, Verizon was selling for $60 a share. (LO12.5) a. If Bob paid a commission of $20, how many shares could he buy if he used only

> For four years, Marty Campbell invested $4,000 each year in Harley-Davidson. The stock was selling for $55 in 2017, $47 in 2018, $36 in 2019, and $33 in 2020. (LO12.5) a. What is Marty’s total investment in Harley-Davidson? b. After four years, how man

> Assume you own a corporate bond that has a face value of $1,000 and pays 4.60 percent. What is the current yield if the bond is currently selling for $1,080? (LO11.6)

> Determine the current yield on a corporate bond investment that has a face value of $1,000, pays 4.45 percent, and has a current price of $920. (LO11.6)

> In 2009, you purchased a $1,000 corporate bond with a coupon interest rate of 4%. Today, comparable bonds are paying 3.30 percent. (LO11.5) a. What is the approximate dollar price for which you could sell your bond? b. In your own words, describe why y

> Five years ago, you purchased a $1,000 par value corporate bond with a coupon interest rate of 3.6 percent. Today comparable bonds are paying 4.2 percent. (LO11.5) a. What is the approximate dollar price for which you could sell your bond? b. In your own

> Assume that you purchased a $1,000 convertible corporate bond. Also assume the bond can be converted to 18.5 shares of the firm’s stock. What is the dollar value that the stock must reach before investors would consider converting to common stock? (LO11.

> Three years ago, you purchased a corporate bond that pays 4.30 percent. The purchase price was $1,000. What is the annual dollar amount of interest that you receive from your bond investment? (LO11.5)

> Using the formula to determine the percentage of growth investments discussed in this chapter, determine how much of Jamie Lee and Ross’s investments should be growth investments? How should the remaining investments be distributed, and what is the assoc

> The Yamaha Aggressive Growth fund has a 1.83 percent expense ratio. (LO13.1) a. If you invest $64,000 in this fund, what is the dollar amount of fees that you would pay this year? b. Based on the information in this chapter and your own research, is thi

> When Jill Thompson received a large settlement from an automobile accident, she chose to invest $140,000 in the Vanguard 500 Index Fund. This fund has an expense ratio of 0.14 percent. What is the amount of the fees that Jill will pay this year? (LO13

> As part of his 401(k) retirement plan at work, Ken Lowery invests 5 percent of his salary each month in the Capital Investments Lifecycle Fund. At the end of this year, Ken’s 401(k) account has a dollar value of $330,700. If the fund charges a 12b-1 fe

> Betty and James Holloway invested $71,000 in the Financial Vision Social Responsibility Fund. The management fee for this fund is 0.80 percent of the total asset value. Calculate the management fee the Holloways must pay. (LO13.1)

> The value of Mike Jackson’s shares in the New Frontiers Technology fund is $63,200. The management fee for this particular fund is 0.60 percent of the total asset value. Calculate the management fee Mike must pay this year. (LO13.1)

> Mary Canfield purchased shares in the New Dimensions Global Growth Fund. This fund doesn’t charge a front-end load, but it does charge a contingent deferred sales load of 4 percent for any withdrawals during the first year. If Mary withdraws $6,000 dur

> As Bart Brownlee approached retirement, he decided the time had come to invest some of his nest egg in a conservative fund. He chose the Franklin Utilities Fund. If he invests $25,000 and the fund charges a 3.75 percent load when shares are purchased,

> Jan Throng invested $61,000 in the Invesco Charter mutual fund. The fund charges a 5.50 percent commission when shares are purchased. Calculate the amount of commission Jan must pay. (LO13.1)

> During one three-month period, Matt Roundtop’s mutual fund grew by $4,000. If he withdraws 35 percent of the growth, how much will he receive? (LO13.4)

> Over a four-year period, LaKeisha Thompson purchased shares in the Oakmark Investor Class Fund. Using the information below, answer the questions that follow. You may want to review the concept of dollar cost averaging in Chapter 12 before completing thi

> Using the investment goal guidelines, assess the validity of Jamie Lee and Ross’s short- and long-term financial goals and objectives (college education for the kids; retirement; and a second home).

> Assume that one year ago, you bought 120 shares of a mutual fund for $31 a share, you received a $0.82 per-share capital gain distribution during the past 12 months, and the market value of the fund is now $36 a share. (LO13.4) A. Calculate the total re

> Three years ago, James Matheson bought 200 shares of a mutual fund for $29 a share. During the three-year period, he received total income dividends of $1.90 per share. He also received total capital gain distributions of $2.80 per share during the thr

> Jason Mathews purchased 300 shares of the Hodge & Mattox Energy Fund. Each share cost $15.15. Fifteen months later, he decided to sell his shares when the share value reached $18.10. (LO13.4) a. What was the amount of his total investment? b. What was

> The Western Capital Growth mutual fund has Total assets: $836,000,000 Total liabilities: $6,000,000 Total number of shares: 40,000,000 What is the fund’s net asset value (NAV)? (LO13.1)

> Currently, 3M Company pays an annual dividend of $5.88. If the stock is selling for $160, what is the dividend yield? (LO12.3)

> Analysts that follow JPMorgan Chase, one of the nation’s largest providers of financial services, estimate that the corporation’s earnings per share will increase from $10.87 in the current year to $11.55 next year. (LO12.3) a. What is the amount of the

> Michelle Townsend owns stock in National Computers. Based on information in its annual report, National Computers reported after-tax earnings of $9,700,000 and has issued 7,000,000 shares of common stock. The stock is currently selling for $32 a share.

> In September, the board of directors of Chaparral Steel approved a 2-for-1 stock split. After the split, how many shares of Chaparral Steel stock will an investor have if he or she owned 230 shares before the split? (LO12.1)

> Wanda Sotheby purchased 120 shares of Home Depot stock at $235 a share. One year later, she sold the stock for $218 a share. She paid her broker a $34 commission when she purchased the stock and a $39 commission when she sold it. During the 12 months

> While both bonds are considered investment grade bonds, the Microsoft bond is rated higher than the Dollar Tree bond. What does the AAA rating for the Microsoft bond mean? What does the BBB rating for Dollar Tree bond mean?

> To help evaluate the CD and the two bonds, complete the table below.

> Assuming you purchased shares in the T. Rowe Price Dividend Growth Fund on March 2, 2020, and based on your answer to question 3, how would you decide if you want to hold or sell your shares? Explain your answer.

> Sarah and James Hernandez purchased 160 shares of Macy's stock at $20 a share. One year later, they sold the stock for $24 a share. They paid a broker an $8 commission when they purchased the stock and a $12 commission when they sold the stock. During

> After reviewing Jamie Lee and Ross’s current financial situation, suggest specific and measurable short-term and long-term financial goals that can be implemented at this stage.

> On March 2, 2020, shares in theT. Rowe Price Dividend Growth Fund were selling for $51 a share. Using the internet or a newspaper, determine the current price for a share of this fund. Based on this information, would your investment have been profitable

> What other investment information would you need to evaluate this fund? Where would you obtain this information?

> Based on the research provided by Morningstar, would you buy shares in the T. Rowe Price Dividend Growth Fund? Justify your answer.

> Assuming you purchased Microsoft stock on February 7, 2020, and based on your answer to question 3, how would you decide if you want to buy more shares, hold your Microsoft shares, or sell your Microsoft stock? Explain your answer.

> On February 7, 2020, Microsoft stock was selling for $185 a share. Using the internet or a newspaper, determine the current price for a share of Microsoft. Based on this information would your Microsoft investment have been profitable? (Hint: Microsoft’s

> What other investment information would you need to evaluate Microsoft common stock? Where would you obtain this information?

> Based on the research provided by Value Line, would you invest in Microsoft stock? Justify your answer.

> Based on your research, which investment would you choose? Why? (Note: To help evaluate the bonds, begin by answering the questions on Your Personal Financial Plan Sheet 37. One information source you might use is the Financial Industry Regulatory Author

> What other information would you need to evaluate these two bonds? Where would you get this information?

> A family spends $46,000 a year for living expenses. If prices increase by 3 percent a year for the next three years, what amount will the family need for their living expenses after three years?

> Jim Johansen noticed that a corporation he is considering investing in is about to pay a quarterly dividend. The record date is Thursday, April 23, 2020. In order for Jim to receive this quarterly dividend, what is the last date that he could purchase

> In 2019, selected automobiles had an average cost of $16,000. The average cost of those same automobiles is now $20,000. What was the rate of increase for these automobiles between the two time periods?

> Using the Rule of 72, approximate the following amounts: a. If the value of land in an area is increasing 6 percent a year, how long will it take for property values to double? b. If you earn 10 percent on your investments, how long will it take for your

> If you borrow $8,000 with a 5 percent interest rate to be repaid in five equal payments at the end of the next five years, what would be the amount of each payment? (Note: Use the present value of an annuity table in the chapter appendix.)

> Tran Lee plans to set aside $2,600 a year for the next seven years, earning 3 percent. What would be the future value of this savings amount?

> A financial company that advertises on television will pay you $60,000 now for annual payments of $10,000 that you are expected to receive for a legal settlement over the next 10 years. If you estimate the time value of money at 10 percent, would you acc

> If a person spends $10 a week on coffee (assume $500 a year), what would be the future value of that amount over10years if the funds were deposited in an account earning 3 percent?

> Carla Lopez deposits $2,800 a year into her retirement account. If these funds have an average earning of 7 percent over the 40 years until her retirement, what will be the value of her retirement account?

> Pete Morton is planning to go to graduate school in a program of study that will take three years. Pete wants to have$8,000 available each year for various school and living expenses. If he earns 3 percent on his money, how much must he deposit at the st

> If you desire to have $12,000 for a down payment for a house in five years, what amount would you need to deposit today? Assume that your money will earn 4 percent.

> Using a financial calculator, Excel, or the time value of money tables in the Chapter 1 Appendix, calculate the following: a. The future value of $550 six years from now at 7 percent. b. The future value of $900 saved each year for 10 years at 8 percent

> During the four quarters for 2020, the Browns received two quarterly dividend payments of $0.32, one quarterly payment of $0.40, and one quarterly payment of $0.52. If they owned 270 shares of stock, what was their total dividend income for 2020? (LO12

> What would be the yearly earnings for a person with $9,000 in savings at an annual interest rate of 1.5 percent?

> Ben Collins plans to buy a house for $260,000. If the real estate in his area is expected to increase in value by 2 percent each year, what will its approximate value be seven years from now?