Jerry would like to save the same amount every month until he turns 40. Which time value concept should he use to compute the value of his savings at that time?
> Which of the following is NOT an example of an entry barrier? a. Government protection through patents or licensing requirements b. Strong brands c. Low capital requirements for entry d. Lower costs driven by economies of scale
> A computer manufacturer has two divisions: one serving residential customers and one serving business customers. If an incentive conflict arises between the two divisions, how will overall company profits be affected? a. Profits will definitely fall. b.
> Attractive industries have all the following, except a. high supplier power b. low buyer power c. high entry barriers d. low rivalry
> An industry is defined as a. a group of firms producing the exact same products and services. b. firms producing items that sell through the same distribution channels. c. firms that have the same resources and capabilities. d. a group of firms produci
> If buyers expect future price increases, they will ___________ their purchases to avoid it. Similarly, sellers will __________ selling to take advantage of it. a. Accelerate; accelerate b. Accelerate; delay c. Delay; accelerate d. Delay; delay
> If the U.S. economy strengthens, consumer incomes increase, and consumers buy more imported goods and services. How will this affect exchange rates? a. The dollar will appreciate relative to the yuan, and U.S. prices will increase. b. The dollar will a
> In July 2014 the price of a Big Mac was $4.80 in the United States while in China it was only $2.73 at market exchange rates. So the "raw" Big Mac index says that the yuan was under-valued by 43% at that time. How would domestic inflation in China affec
> Following an increase in Mexican interest rates relative to U.S. interest rates, which caused US investors to invest in Mexican Bonds. Which of the following would occur? a. The dollar would appreciate relative to the peso, and Mexican prices would incr
> Following an increase in Mexican interest rates relative to U.S. interest rates, which caused Mexican investors to borrow abroad to invest domestically, which of the following is expected to occur? a. The dollar would appreciate relative to the peso, and
> Following a peso appreciation relative to the dollar, which of the following results is expected to occur? a. U.S. consumers would benefit, and Mexican producers would benefit. b. U.S. consumers would be hurt, and Mexican producers would benefit. c. U.S
> Following a peso appreciation relative to the dollar, which of the following results is expected to occur? a. Prices in the United States would rise, and prices in Mexico would rise. b. Prices in the United States would rise, and prices in Mexico would
> If the Chinese yuan devalues relative to the US dollar, then a. US producers will benefit; Chinese consumers will benefit b. US producers will benefit; Chinese consumers will be hurt c. US producers will be hurt; Chinese consumers will benefit d. US pro
> Local Spanish TV markets cater to individual cities by producing local content. This content can be produced in-house by a network or they can also purchase rights to third-party produced content. Recently, Spanish cities have erected barriers to entry i
> Alpha Industries is considering acquiring Foxtrot Flooring. Foxtrot is worth $20 million to its current owners under its existing operational methods. Because there are some opportunities for synergies between the two companies, Alpha believes that Foxtr
> What are the five filing statuses? Briefly describe how your filing status is determined. What parts of the tax form are affected by your filing status?
> Who typically files Form 1040EZ? Which tax form do most other individual taxpayers file?
> What are FICA taxes? Describe the two portions of FICA and explain what they pay for. Who pays FICA?
> Why is it important to understand the tax consequences of your financial decisions?
> What is an annuity?
> What is a Section 529 College Savings Plan? What are the income limits for parents who desire to take advantage of this plan?
> What is a Coverdell Savings Account? List some expenses that can be paid with Coverdell funds.
> List some of the primary features of the American Taxpayers Relief Act of 2012.
> What is an exemption? How many exemptions may a taxpayer claim?
> What are itemized deductions? How do itemized deductions relate to standard deductions? Provide some examples of itemized deductions.
> Mia has $3,000 in assets, a finance company loan for $500, and an outstanding credit card balance of $135. Mia’s monthly cash inflows are $2,000, and she has monthly expenses of $1,650. What is Mia’s net worth?
> Sandy and Phil have recently married and are both in their early 20s. In establishing their financial goals, they determine that their three long-term goals are to purchase a home, to provide their children with a college education, and to plan for their
> How is adjusted gross income determined?
> Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual salary is $48,000. He claims no exemptions (he enjoys the
> Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual salary is $48,000. He claims no exemptions (he enjoys the
> Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual salary is $48,000. He claims no exemptions (he enjoys th
> To what types of cash flows is the time value of money concept most commonly applied?
> Your childhood friend, Brad Brooks, has asked you to help him gain control of his personal finances. Single and 30 years old, Brad is employed as a salesperson for a technology company. His annual salary is $48,000. He claims no exemptions (he enjoys the
> Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin college in 12 years. They will invest the $300 in a sa
> Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin college in 12 years. They will invest the $300 in a sa
> Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin college in 12 years. They will invest the $300 in a savings account that
> What is the primary objective of investing? What else must be considered? What potential investment vehicles are available?
> Recall that Dave and Sharon Sampson established a plan to save $300 per month (or $3,600 per year) for their children’s education. Their oldest child is six years old and will begin college in 12 years. They will invest the $300 in a savings account that
> DeMarcus wants to retire with $1 million in savings by the time he turns 60. He is currently 18 years old. How much will he need to save each year, assuming he can get a 12% annual return on his investments?
> Emily and Paul are married and filed a joint return for 2015. The standard deduction for their filing status is $12,600. They have the following itemized deductions: Medical bills above the 10% limit……….$400 Mortgage interest…………………………….3,500 State inco
> How much will you have in 36 months if you invest $75 a month at 10% annual interest?
> Luis wants to know how much he will have available to spend on his trip to Belize in three years if he deposits $3,000 today at an annual interest rate of 9%.
> Sandra wants to deposit $100 each year for her son. If she places it in a savings account that pays 5% per year, what amount will be in the account in 20 years?
> What is the time value of money? How is it related to opportunity costs?
> Kyle has $1,000 in cash received for high school graduation gifts from various relatives. He wants to invest it in a certificate of deposit (CD) so that he will have a down payment on a car when he graduates from college in five years. His bank will pay
> Elizabeth borrowed $1,000 from her credit union. She has to make only one payment at the end of the loan. How much will she owe at the end of the year if the credit union charges her 5% interest?
> Jim accepted a $3,000 loan from his Uncle Kurt. Uncle Kurt agreed to defer payments for two years until after Jim graduates from college. How much will Jim owe in two years if his uncle charges him 6% interest compounded annually?
> Why do most people need access to financing at some point in their life?
> Winston will receive $100,000 on his 25th birthday. Which time value of money concept would you use to compute the value of his future inheritance?
> Jen spends $10 per week on lottery tickets. If she takes the same amount that she spends on lottery tickets and invests it each week for the next five years at 10%, compounded weekly, how much will she have in five years?
> Lakesha recently found out that her credit card balance was compounded daily rather than monthly. How will this compounding frequency impact the outstanding debt she owes on her credit card?
> In determining the future value of an annuity to be invested monthly over a five-year period, what number of periods should you use?
> Describe some instances when determining the present value of an amount is useful.
> Twins Jessica and Joshua, both 25, graduated from college and began working in the family restaurant business. The first year, Jessica began putting $2,000 per year in an individual retirement account and contributed to it for a total of 10 years. After
> Cindy and Jack have always practiced good financial habits, in particular, developing and living by a budget. They are currently in the market to purchase a new car and have budgeted $300 per month for car payments. While visiting a local dealership, a
> Kirk can take his $1,000 income tax refund and invest it in a 36-month certificate of deposit at 7%, compounded monthly, or he can use the money to purchase a home entertainment system and put $30 a month in a bank savings account that will pay him 7% an
> The Sampsons realize that the first step toward achieving their financial goals is to create a budget capturing their monthly cash inflows and outflows. Dave and Sharon’s combined income is now about $4,000 per month after taxes. With the new cash inflo
> Define personal financial planning. What types of decisions are involved in a personal financial plan?
> The Sampsons realize that the first step toward achieving their financial goals is to create a budget capturing their monthly cash inflows and outflows. Dave and Sharon’s combined income is now about $4,000 per month after taxes. With t
> The Sampsons realize that the first step toward achieving their financial goals is to create a budget capturing their monthly cash inflows and outflows. Dave and Sharon’s combined income is now about $4,000 per month after taxes. With the new cash inflow
> Jesse has just learned that she won $1 million in her state lottery. She has the choice of receiving a lump-sum payment of $312,950 or $50,000 per year for the next 20 years. Jesse can invest the lump sum at 8%, or she can invest the annual payments at 6
> The Sampsons realize that the first step toward achieving their financial goals is to create a budget capturing their monthly cash inflows and outflows. Dave and Sharon’s combined income is now about $4,000 per month after taxes. With t
> From the information in Problems 1 through 3, how much can Angela expect to save in the next 12 months? Data from Problem 1: Angela earns $2,170 per month before taxes in her full-time job and $900 before taxes in her part-time job. About $650 per mont
> Angela makes a budget based on her personal cash flow statement. In two months, she must pay $375 for tags and taxes on her car. How will this payment affect her net cash flow for that month? Suggest ways that Angela might handle this situation.
> Stuart is in the 25% tax bracket. Recently, he sold stock that he had held longer than a year for a gain of $20,000. How much tax will Stuart pay on this gain?
> Angela (from problem 1) inspects her checkbook and her credit card bills and determines that she has the following monthly expenses: Rent………..……………….….$500 Internet……………………………30 Electricity………………………..100 Water…..……………………………25 Cellular….…….…………………….40 Gr
> Angela earns $2,170 per month before taxes in her full-time job and $900 before taxes in her part-time job. About $650 per month is needed to pay taxes. What is Angela’s disposable income? Why is it important to track disposable income?
> Jarrod is a college student. All of Jarrod’s disposable income is used to pay his college-related expenses. Although he has no liabilities (Jarrod is on a scholarship), he does have a credit card that he typically uses for emergencies. He and his friend
> Matt is self-employed as a carpenter. He made $42,000 after expenses in 2015. How much did he contribute to FICA taxes?
> If Angela is saving $350 per month, what is her savings rate (i.e., savings as a percentage of disposable income)?
> Angela analyzes her personal budget and decides that she can reduce her recreational spending by $50 per month. How much will that increase her annual savings? What will her annual savings be now?
> What is a personal balance sheet?
> ABC Stacey would like to have $1 million available to her at retirement. Her investments have an average annual return of 11%. If she makes contributions of $300 per month, will she reach her goal when she retires in 30 years?
> How do you think people who do not create a budget may deal with cash deficiencies? How can this affect their personal relationships?
> Suppose you want to change your budget to increase your savings. What could you do?
> Describe the process of creating an annual budget.
> List your monthly cash outflows. Will everyone have similar cash outflows?
> What are the six key components of a financial plan?
> Identify some factors that affect cash inflows.
> Ricardo wants a career where he can help people. He also wants to travel and see the world. He is thinking about becoming a personal care aide. What advice would you give him?
> Define cash inflows and cash outflows and identify some sources of each. How are net cash flows determined?
> What two personal financial statements are most important to personal financial planning?
> What are two factors that impact your cash inflows?
> Heather purchased a new car for $18,000 three years ago and listed the new car as an asset with a value of $18,000 on her personal balance sheet. She was able to borrow the entire $18,000 to purchase the car and listed the car loan as a liability with a
> Lena has just become eligible to participate in her company’s retirement plan. Her company does not match contributions, but the plan does average an annual return of 12%. Lena is 40 and plans to work to age 65. If she contributes $200 per month, how muc
> Justin’s stock portfolio increased in value during the year, and the balance on his mortgage declined. What happened to his net worth over the course of the year?
> What three financial characteristics can be monitored by analyzing your personal balance sheet?
> How does a personal balance sheet help you track your net worth?
> What are liabilities? Define current liabilities and long-term liabilities.
> Describe two ways real estate might provide a return on an investment.
> How does your choice of career impact your financial plan?
> Stephen is in a 15% marginal tax bracket. In 2015, he sold stock that he had held for nine months for a gain of $1,900. How much tax must he pay on this capital gain? How much would the tax be if he had held the stock for 13 months?
> How are unexpected expenses and liquidity related?
> How do you assess the accuracy of your budget? How can finding forecasting errors improve your budget?
> What is a budget? What is the purpose of a budget? How can a budget help when you are anticipating cash shortages or a cash surplus?
> Jeremey wants to increase his net worth. What advice would you give him?
> Jason’s car was just stolen, and the police informed him that they will probably be unable to recover it. His insurance will not cover the theft. Jason has a net worth of $3,000, all of which is easily convertible to cash. Jason requires a car for his jo
> Explain how credit card usage can impact your spending habits.
> Explain in logical terms why a weak economy can cause the net worth of individuals to decline.
> Explain in logical terms why values of assets such as homes and stocks may decline during a weak economy.
> What is the liquidity ratio? What does it indicate? How is the debt-to-asset ratio calculated? What does a high debt ratio indicate? How is your savings rate determined? What does it indicate?
