Question: Megan Berry, a freshman horticulture major at
Megan Berry, a freshman horticulture major at the University of Minnesota, has some financial questions for the next three years of school and beyond. Answers to these questions can be obtained by using Appendix A or the Garman/Forgue companion website.
(a) If Megan’s tuition, fees, and expenditures for books this year total $22,000, what will they be during her senior year (three years from now), assuming costs rise 4 percent annually?
(Hint: Use Appendix A.1 or the Garman/Forgue companion website.)
Appendix A.1:
(b) Megan is applying for a scholarship currently valued at $5,000. If she is awarded it at the end of next year, how much is the scholarship worth in today’s dollars, assuming inflation of 3 percent?
(Hint: Use Appendix A.2 or the Garman/Forgue companion website.)
Appendix A.2:
(c) Megan is already looking ahead to graduation and a job, and she wants to buy a new car not long after her graduation. If after graduation she begins an investment program of $2,400 per year in an investment yielding 4 percent, what will be the value of the fund after three years?
(Hint: Use Appendix A.3 or the Garman/Forgue companion website.)
Appendix A.3:
(d) Megan’s Aunt Karroll told her that she would give Megan $1,000 at the end of each year for the next three years to help with her college expenses. Assuming an annual interest rate of 2 percent, what is the present value of that stream of payments?
(Hint: Use Appendix A.4 or the Garman/Forgue companion website.)
Appendix A.4:
Transcribed Image Text:
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3.4725 96EVE 69 OVE HLEE 00IEE 18LZE SZSIE 00507 00001 SEBI E 9IZI'E 60 60 E 10E DE 000 006 IZ 008IZ 00LIZ 00EIZ 001 IZ 0001Z 0060 Z 0080 Z 0090Z 00 ED Z 001 0Z 2. 0000I 00001 00001 00 001 00001 0000' 000I 00 001 00001 00001 0000' 00001 0000'1 0000'1 0000'1 0000 00 001 00001 00001 % 61 %81 %91 %SI %EL % 0L %6 %8 %9 %S % %E (Used to Compute the Compounded Future Value of a Stream of Income Payments) Future Value of a Series of Equal Amounts (an Annuity of $1 Paid at the End of Each Period) Appendix A-3 SENG EZS ISSS 1088S LZE I'2 SHOEB 時166 41 960I 12.2335 LO08 EI 6.2463 61925I 65SZBI SEZVIE 1961'6E 05 ZSS EILBS SEEZ 9 BI99 O5012 1I568 16L6 13.3317 ESO SI 1651'21 I EZ 555ELZ 32 8347 686 LEZS 89I5S 0995 9 Z5S O8 BE698 SZLESI BISZ'II BL EI LL OBSZ DE 60SS9 BIZOR 10598 9696 15.1411 I E9991 SI 61 BZZZS 910SS 6608S DZSI 9 SEES 9 91098 990 E6 191 IDI I IS0 II 12 1371 290 EI IL BI 7.4412 EIBZ'IZ 19IEZ ISIZS 616S SEISY RIS 家00 962E 91 600L 96SSEZ E96 090ZS IEBLS 6.1182 909 1906 9 LILEZ 188 8 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9ES2 BEBE B ISBE 6 ESIS DI ISSZII 88633 12 0959 SEB LEEZS LLE65 59079 1569 Z5 089 190EB SZI 6BEE 5.0188 19125 Z6RS I012'9 SEZOZ 109E2 6011'8 ZDES B 44941 48332 S009 2966 629 7453 192 6.7327 26102 2291 4.3436 ELE 19IS 6EES BESS 99'S EIL6S ZE99 3.8172 SSZEL 4.2072 6.2098 0 OS 19ES 1 2009 SSEE BEOE Z6BSE SLE SL66E 41114 SOEZ ESSE ELI6 S5625 5.2421 ISE 2001 44518 ILILE 98E9Z 10697 ZENZ 0S58Z LE167 3.0373 DIE 6691E 2GEZE ZLBE E 09SE 331 21 ENIZ 60 EIESZ 1.6081 OS880 9595I Z5851 Z5091 SEL'I SSEL'I EERI 1988I SEI6I 1.7833 0.8 33 0.8403 1606 D 6Z60 S1960 60L60 1066 0 0.9346 %61 %81 %91 %EL % Z1 %01 %6 %8 %9 %E (Used to Compute the Discounted Present Value of a Stream of Income Payments) Present Value of a Series of Equal Amounts (an Annuity of $1 Received at the End of Each Period) Appendix A-4
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> Now that you have read the chapter on managing checking and savings accounts, what would you recommend to Nathan Rosenberg and Avigai Abramovitz in the case at the beginning of the chapter regarding: 1. Where they can obtain the monetary asset managemen
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> Lost/Stolen Debit Cards. What should you do if your ATM or debit card is lost or stolen? Why?
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> When might it be appropriate for you to save via a certificate of deposit versus a money market account?
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> Some college students earn money that is paid to them in cash and then do not include this as income when they file their tax returns. What are the pros and cons of this practice?
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> People regularly make decisions in career planning that have trade-offs. Identify some benefits and costs people are faced with as well as two lifestyle trade-offs.
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> Asset Management Kwaku Addo, a licensed physical therapist from Topeka, Kansas, earns $4,200 per month take-home pay and has the funds directly deposited in his checking account. He spends only about $3,500 per month, and the excess funds have been build
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> What are the four different ways financial planners may be compensated?
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> Identify three ways you might more effectively communicate about money matters.
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> Explain what a cash-flow calendar accomplishes. Name three techniques to control spending.
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> What are budget estimates? Offer some suggestions on how to go about making budget estimates for various types of expenses.
> Explain why setting financial goals is an important step in budgeting.
> Name different ways to handle budget variances.
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> Kate Beckett and her two children, Austin and Alexandra, moved into the home of her new husband, Richard Castle, in New York City. Kate is a novelist, and her husband is a police detective. The family income consists of the following: $60,000 from Kate&a
> Summarize the benefits of participating in a high-deductible health care plan at work.
> What is a flexible spending account and what do pretax dollars have to do with it?
> Distinguish between Chapter 7 and Chapter 13 bankruptcy, and explain who might be forced to use Chapter 13 rather than Chapter 7.
> What services are provided by a credit counseling agency, and how might a debt management plan work to provide relief for someone who is having debt problems?
> List the major provisions of the Fair Debt Collection Practices Act.
> Identify four signs of over indebtedness.
> Summarize the rules that apply if you lose your ATM or debit card and it is used without your authorization.
> List the steps you should take if you find an error in your monthly statement regarding an electronic transaction.
> Distinguish among credit cards, debit cards, and stored-value cards.
> Summarize what you know about Bitcoin.
> Julia does well financially because she earns a good salary as an engineer, is somewhat frugal, and is making the maximum contribution to her employer-sponsored retirement plan. After reading about ways to decrease her income tax liability, she has some
> Use Table 1-1 to calculate the future value of (a) $2,000 at 5 percent for four years, (b) $4,500 at 9 percent for eight years, and (c) $10,000 at 6 percent for ten years. Table 1-1: Table 1-1 Future Value of $1 After a Given Number of Periods Pe
> Explain the difference between simple interest and compound interest, and describe why that difference is critical.
> What are the two common questions about money?
> Summarize how to fix errors in your credit report, and explain why some people add a consumer statement to their report.
> Name three steps to help establish a good credit history.
> What is a credit history, and what role do credit bureaus play in the development of it?
> Distinguish among the credit terms: prescreened, invitation-to-apply, and preapproved.
> Differentiate between ownership via joint tenancy with right of survivorship and tenancy in common.
> Explain why correctly owning assets is important to the personal finances of people, especially couples.
> Identify three strategies to avoid overpayment of income taxes, and summarize the essence of each.
> Several years have gone by since Harry and Belinda graduated from college and started their working careers. They both earn good salaries. They believe that they are paying too much in federal income taxes. The Johnsons’ total income la
> Summarize the differences between a traditional individual retirement account (IRA) and a Roth IRA.
> Explain how to reduce income taxes via your employer, and name three employer sponsored plans to do so.
