Question: Throughout this book, we will present a
Throughout this book, we will present a continuing narrative about Harry and Belinda Johnson. Following is a brief description of the lives of this couple. Harry is 28 years old and graduated five years ago with a bachelor’s degree in interior design from a large Midwestern university near his hometown in Indiana. Since graduation Harry has been working in small interior design firm in Kansas City earning a salary of about $50,000. Belinda is 27, has a degree in business administration from a university on the West Coast, and has been employed in a medium-size manufacturing firm in California for about five years. Harry and Belinda both worked on their schools’ student newspapers and met at a conference during their junior year in college. After all these years they met again socially in January in Kansas City, Missouri where Belinda was visiting relatives and by chance she and Harry were at the same museum. After getting reacquainted they started dating and in only a matter of months Belinda got transferred from California to work in Kansas City and in June they got married. Belinda is now employed as a stockbroker earning about $77,000 annually. After the wedding they moved into his small apartment. They will face many financial challenges over the next few decades as they buy their first home, decide on life insurance needs, begin a family, change jobs, and invest for retirement. Required: (a) Harry receives $3,000 in once a year interest income payments from a trust fund set up by his deceased father’s estate. The amount will never change until it runs out in 20 years. What will be the buying power of $3,000 in ten years if inflation rises at 3 percent a year? (Hint: Use Appendix A.2.) Appendix A.2: 
(b) Belinda and Harry have discussed starting a family but decided to wait for perhaps five more years in order to get their careers moving along well and getting their personal finances solidly on the road to success. They also know that having children is expensive. The government’s figure is that the extra expense of a child would be about $16,000 a year through high school graduation. How much money will they likely cumulatively spend on a child over 18 years assuming a 3 percent inflation rate? (Hint: Use Appendix A.3.) Appendix A.3: 
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> 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?
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> 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.
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> Explain how to reduce income taxes via your employer, and name three employer sponsored plans to do so.
> Distinguish between two major types of tax-sheltered investment returns
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> List some advantages of keeping good financial records.
> Give three suggestions on how to succeed in an interview.
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> Offer suggestions on correctly assembling a résumé and what style formats are available.
> Give two career advancement tips.
> Explain how to compare salary and living costs in different cities.
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> Explain and give an example of how marginal utility and marginal cost makes some financial decisions easier.
> Define opportunity cost and give an example of how opportunity costs might affect your financial decision making.
> What is the best thought on the list of keeping student loan debt under control?
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> Explain the benefits and drawbacks of certificates of deposit.
> Distinguish between a money market account and a money market mutual fund account.
> Summarize what happens when you write a check.
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> List five examples of tax credits.
> What advice on filing a Form 1040X can you offer someone who did not file a federal income tax return last year or in any one of the past three years?
> Distinguish between a standard deduction and a personal exemption.
> List three examples of adjustments to income.
> Give five examples of income that is excluded from IRS reporting.
> How are long-term and short-term capital gains treated differently for income tax purposes?
> Give five examples of income that must be included in income reported to the Internal Revenue Service.
> Distinguish between fixed and variable expenses, and give two examples of each
> How should assets and liabilities be valued for the balance sheet, and why?
> Victor and Maria Hernandez Victor and Maria, both in their late 30s, have two children: John, age 13, and Joseph, age 15. Victor has had a long sales career with a retail appliance store. Maria works part-time as a medical records assistant. The Hernande
> What is taxable income for an individual? How does it differ from taxable income for a corporation?
> The company president is reviewing the performance and budget of the marketing department with the vice president of marketing. Should that be a one-on-one meeting or should the CFO be present? Why? If you feel the CFO should be there, what should be his
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> If the Johnson Company of Problem 2 is subject to a marginal tax rate of 34%, what is the cash flow associated with the sale of the used truck?
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> Rachel and Harry are planning to get married. Both have successful careers and expect to earn the following this year. whether getting married will cost or save them money and how much. Assume that getting married during a year subjects the entire yea
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> Inky Inc. reported the following financial information in 2015. Operating income (EBIT)………………$650,000 Interest………………………………………...$430,000 Dividends from Printers Inc. not included in operating income (Inky owns 3% of Printers) …$20,000 Dividends paid t
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> Ed Fletcher is planning to start a business that requires an investment of $500,000. He has that much money, but can also borrow virtually the whole amount from a rich relative. (This is very unusual.) Ed feels that after the business is started, it w
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> Harry Swartz wants to invest in a bond and has narrowed his choices down to two issues. The first is offered by Microsoft Corp. and pays an interest rate of 8%. The second option is offered by the city of Springfield, Massachusetts, and offers a return o
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> Is the agency problem an ethical issue or an economic issue?
> The Coolidge family has taxable income of $165,000. They live in a state in which income over $100,000 is taxed at 11%. What is their total effective (marginal) tax rate?
> The Digital Systems Company was organized two years ago to take advantage of an internet opportunity. Investors paid $12 a share for 2 million shares with a $4 par value. In the next two years the company had earnings of $2 million and $3 million respe
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> Becher Industries has three suppliers for its raw materials for manufacturing. The firm purchases $180 million per year from Johnson Corp. and normally takes 30 days to pay these bills. Belcher also purchases $150 million per year from Jensen, Inc. and
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> What are the significant financial advantages and disadvantages of the sole proprietorship/ partnership form in comparison with the corporate form?
> How does the activity of investors in financial markets affect the decisions of executives within the firm?
> Discuss the relationship between finance and economics.
> Discuss the differences, similarities, and ties between finance and accounting.
> What is the primary factor that determines the price of securities? Can you think of another factor that might significantly affect how investors value the first factor?
