Using the present and future value tables in Appendix A, the appropriate calculations on the Garman/Forgue companion website, or a financial calculator, calculate the following:
(a) The amount a person would need to deposit today to be able to withdraw $6,000 each year for ten years from an account earning 6 percent.
(b) A person is offered a gift of $5,000 now or $8,000 five years from now. If such funds could be expected to earn 8 percent over the next five years, which is the better choice?
(c) A person wants to have $3,000 available to spend on an overseas trip four years from now. If such funds could be expected to earn 6 percent, how much should be invested in a lump sum to realize the $3,000 when needed?
(d) A person invests $50,000 in an investment that earns 6 percent. If $6,000 is withdrawn each year, how many years will it take for the fund to run out?
Table Appendix A:
5988.914 9 100.438 ISE!ZE ERLEDS L59 EBOI DE EZ 00L 6SELOS 606ELII 18456-43 91 06 9 74.35 75 6EBE 91692 9件91 18.4202 (RORE ES ZIZIRIE 60 00 59 DZOZT DROZZ 31.4094 ENEZEZ ESL918I 90LEEN 做5B BIIZ9 ZD56 05 65L I BE 6656 EZ EB ZZ EZI9L BEET 18114 5.7435 6IZE' 191' ÞE'E ELZZ DE 9EIB261 E68I'SSI IL 26 6 IE 69 W BSI 9VE IE98 SI ELIE6 LBII'E 996EZ BSLL'I 7.1143 13345 DOORE9 130.4112 1648447 B6522B SEE9 DE 66LS BI DI ZI 1.7410 EIZET BE 90LEZEI EEBS EDI 55E 69 ESESE 6EBE HE ZE'IZ 9BEL 91 DOLIEI IBB62 10.2451 196EL BEIZ9 48223 SEEL'E EIZZZ 690LI ZEDET SSLPPII BI60 26 06EEL 47.4141 D6L6 ZE 999 DE 37.8568 S066 EZ 6620SI ZB1611 LOBS L55SE 9%1て PEL9I 796E56 IBRELL 98%て9 ER DI 5.4274 6167 33864 EE9SZ RE607 6.8485 DZED S9 06 DIES ELEZE 1SEZSE 西区て 23.2122 IBR BI 992991 50724 6時『 BZEDZ LEDZI 6.34 12 24 2900 LE SI682 SI LBS 13.55 23 SE E6 6 4.7405 L6I BE SILOE SEL61 66.2474 30.3762 190Z55 BELLDI EDDI "ZI a. 1403 98599 1961 4.4304 SEDDE 90中ト ESZ67 660EZ 381421 I SD09 DI65 BE BE ZEZE SE ED LZ SIZBBI 9/99 SI II ZDEI BE DB DI BBDI'9 BE EDS 966EE BBLZZ EDOBI 8.9492 9LEE BE DE BE LZ 9501 EZ 80 61 599E91 13.7435 IEZSTI E919'6 EZ 90B 09S DI 99 EES9Z 19081 658VI WIREZ BIEZDI LIPI'S SIED SESI 61 EEZ9 5D06 ZZ EE LE61 529 55LEZI 2545 DI EEDE 66555 D966 E 6ELEE 2.8543 990Z BS ZD'Z 19611 BI 6.5436 1.7024 1981 2 E19L'01 19862 0998'9 IS68S LZE 000LE BBSI'E BZS91 EIBIT 2 19.2441 ED EE ZI 0時とD1 60LES OS 65 ED6'E DE LR'I 91 34299 25404 13728 56BSE LE LETI LBES DI 559Z6 I LEIB LEIL R下 DESLZ 996EZ 600B'I DESST 65EI DI911 51 6.2543 3.6425 3.1722 Z6EBZI 10.1472 SL00 6 SLB62 El '9 SLELE SLSZ 666'1 LIEL'I S6I EI 5.5348 E 669 DI SESE EE RRT BS00'E 67Eて EI 95964 1968 EOSES SPEED SBEE ZBISZ 22522 12682 I DEF2 D295 ELIIS SBFE BISIE 6SE BE IE SBZ 9I EE Z EDIL'I 5BES'I 1.3842 12414 L1619 LI695 BE EZS 8908 44114 DEDBE 16EBZ LE 662 2.3674 68SI Z 6291 13439 BOET BESIS 4.7854 IZO 6ISE LELL'T 6L SET 06661 SBEBI EISSI LEGO1 6 BE6Z EBSLE SI ISE LZE DESDE SDEZ ED SBI ZBI LI BE6SI B 2.1436 EBLEE SSBIE ZI 00 E 00992 2.5023 KSEZ 29202 BEILT B509 15036 SBIVI 1.3159 ESOTI 3.5832 19487 9667 LELEZ BE 6'1 SI901 9 E国て EDDI Z IS891 SD191 9BES'I E6 ZBEEI ENTI EESIT DISOT 5 23864 18424 20114 1.7623 9ELOZ ES00Z BEE 90181 SOE91 SE LS'I IBIST BOIEI 669I'1 1新41 12 155 60961 60ST SII EDE O 191I 95ET I BBI'I 19911 1.1236 SZDI'I E0 901 13225 1.2321 1.2544 1.0404 00611 DOBIT 009 DOEI 00601 00901 COED %61 20% %8L % 91 %EL %0L % 6 % 8 %9 % %E 15% 11% Future Value of a Known Lump Sum) Future Value of a Single Amount ($1 at the End of n Periods) (Used to Compute the Compounded Appendix A-1 IDDOD ZD0O D EDDO'D 9000D 6D DO D SEDD D SB00 D DEID'D EIZOD 6EEDD ESDD SILED IBEZD DS 2000 0 DI DO D EI00'0 61000 LE 0OD ES 00'0 SL000 ISIOD IZZOD BIED'O 0年00 ZL 600 0. 14 20 EBOZO EROED 990ED OP D6000 OLLOD ISIOD 9610'0 ÞEEDD 0.0437 EL SO D 0.1314 S0ID 04 120 IE96D DE I500 D 1900D ZB0O'D SDIDD SEI DD WIDD LEDD DE 90 D ZZBD'D ELDI'D LDRED EBND a. 1846 1900 D L6000 EZIOO LSI OD 0O ZD D 9ZEDD 0.0419 BE SO D E690 D 65I I'0 BZ 03335 EL 0O D 1600 D 00 144 ZBI OD DE ZO D 69E00 600ID BED 65S D 60 ID'D SEIDO 69DD II ZDD 192DD IEED'O ZI BE'D S25DD E990D EE BD D 0. 1064 091 I'0 0時10 0.0417 ZSEI'D B6IZD LE9D DELLD a1722 权100 09100 0.0304 BLED'O BB50D SE LOD EZ 60 0 DE EZ D ES'0 ISLED 5609D BRIOO 6 EDD ZESOO 65900 RIO IOLE'O I 06ED 24 EZ 0.0231 ISIDD EB ID'D DZZDD ZEDD I EO'D BELDD ZDED D BLEID EDLI'D E0IZD BI ED 96 ZE'D 290SD ZE9 D 0.0402 IBIOD BI 20'0 2死00 9IEDD ZBED D 2910 0 0950'0 08900 て610 6EBI D BIJE'D 6IZSO 89190 65 20'0 60EDD DEDD 0.0443 LESOD BEDO'O ISEL'O LEDI'O SIED 68SE'O BREVO SLESD 1920D BDED'D 5SEDD EEDD I SDD II 90D BZZD'D B9BDD ZEDID SIZD BI IED 6NE'D DE 49D DZ 0.4964 LESSD EDLSD 0.1240 56IB'D 0.2584 El ED D 29ED'O 90500 96500 ED LO0 6ZB00 I8600 19ID LLEID 0. 1635 SI61'0 SOEE D 19的D 61 0.2317 NEDD LEDOD RO SO'O RORO D 60 0 BOLL'O DDE L'O RSID ED SED 0DERD 0.7002 BI 0.0992 0.4155 ISOD DE SD D DO 90'D ZOBOD BL DI D SE9ID BL6I D II EZ'D EDLED 991 ED LED EDED DS090 0. 1252 0.5134 0.8444 0.0541 BI 90 0 LIBO0 DE6O D 0.1883 060ZD 61620 LBEED SE 6E D 6EES O 0.6232 度LD 91 0.1415 SE LOD SEHO'O 61600 0. 1401 66510 ZSIED 2DED EL IPD ESSS'O SBEO D 2SZID DZ EZ D 0.2046 EE RD SOPED BLBED IS0SD 1 1990 DO LBD a.14 13 0.4423 14 SE 60 D 0. 1821 2DETO EDES D 90090 DI890 DELLD LBLBD EI 0.2042 0.2292 0.4 150 98LED 55SE'O 89550 0.7014 SBRD 12 a.14 76 619'0 L161'0 EI D BLLI'D 99EZ'D SLBZD EL IED SD SED SLBE'D 8925D 9即90 EDE D EDEBD 0.7224 SI 9 D DZZED ZSED 04632 EBOS D 1855 0 BE 19'0 9L90 0.7441 EDZB D ES 06 0 0.3855 0.4224 BE6D 0602 D SLDE'O 6ZEED 909ED 606E D 19'0 0.7664 89EB D 0.7026 0.2848 OS DED 60ZE D 90 SE'O ZNED 6EDV D BE ED DEBSD 2DEL'O SE SRD SE Z6 D BEIED ZEEED BE SE D E5 LE D 966E'D I SZYD EZSD ZEISD SEBSD 1599 D IEIBD 90 LBD LZE6 D 6EE D 0.3521 POLED B6BED 990S0 04803 0.5346 6029'0 SE 65D E9650 ZDE90 E9990 OS OL D E06L0 SLEBD DB 88 D 0.9420 SI S60 0.43 23 19D 6690 90890 DE LLD 0.7473 SER'O (506D 08219 EE即D ZBE'D BSI 50 LEESD EZ 55D BI 25D EEI 90 5SE9D ZB59 D DE 89'D DSE LD LZZB'D BISBD 5BBBD BE Z6D DI 96'0 0.7921 9809 0 0.6244 20190 I E690 ZI EL D EI SL'O BE6LO E9180 96 EB D BESB'O 06880 ISI60 0.9423 906'0 E 29'0 ZBILO SOELD ZEND SEN'D LEBLO ELSBD DELBD Z96D EDR6 0 2. EE ER D EDS'D LISBD に策D DSBBD ED 06 D 1606'0 51960 IDE6'D 0.9434 0.9524 % 07 %61 %81 %91 % SL %EL 11% %0L %6 %8 %9 %S % 12% Known Future Single Lump Sum) Appendix A-2 Present Value of a Single Amount ($1) (Used to Compute the Discounted Present Value of Some
> Now that you have read the chapter on the importance of career planning, what do you recommend to Nicole Linkletter in the case at the beginning of the chapter regarding: 1. Clarifying her values and lifestyle trade-offs in career planning? 2. Enhancing
> Victor is somewhat satisfied with his sales career and has always wondered about a career as a teacher in a public school. He would have to take a year off work to go back to college to obtain his teaching certificate, and that would mean giving up his $
> 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
> Now that you have read the chapter on managing income taxes, what advice can you offer Ace and Florence in the case at the beginning of the chapter regarding: 1. Using tax credits to help pay for Ace’s college expenses? 2. Determining how much money Flor
> Now that you have read the chapter on financial planning, what do you recommend to Austin Patterson for his talk with Emily on the subject of financial planning regarding: 1. Setting financial goals? 2. Determining what they own and owe? 3. Using the inf
> Now that you have read the chapter on the importance of personal finance, what do you recommend to Jing Wáng in the case at the beginning of the chapter regarding: Participating in her employer’s 401(k) retirement plan? Understanding the effects of her
> Is it too easy for college students to get credit cards? Who do you know who has gotten into financial difficulty because of overuse of credit cards, and what happened?
> Use the information on pages 185, 186 and 187 to discuss how best to deal with student loan debt Page No. 185, 186,187: CHAPTER 6 Building and Maintaining Good Credit 185 6.2a Method 1: Continuous-Debt Method A useful approach for determining your d
> How might students judge whether they are taking on too high a level of student loan debt?
> What aspects of your financial life make you creditworthy? What aspects might make it difficult for you to obtain credit?
> Have you ever had a disagreement with a friend or family member over a money issue? How might you communicate differently now?
> Lost/Stolen Debit Cards. What should you do if your ATM or debit card is lost or stolen? Why?
> Harry has started out fine in his career as his responsibilities have increased since he began working there about five years ago. Belinda recently attended a conference for those in her stock brokerage field and by chance she dropped in at the “career s
> When might it be appropriate for you to save via a certificate of deposit versus a money market account?
> Many people desire protection from the possibility of overdrawing their checking account. Banks make it easy by allowing you to opt into overdraft protection. Explain how this and other overdraft protections work and why the true cost of opting in may ex
> When would you recommend using an individual account, a joint tenancy with right of survivorship account, and a tenancy by the entirety account for your monetary assets?
> You know someone who recently had $90 in overdraft fees for two small debit card transactions. Explain to him why such high fees resulted from such small transactions and the relative benefits of having an automatic funds transfer agreement versus an aut
> List two examples of checking account transactions that result in assessment of fees that are avoidable?
> Identify three strategies to reduce income tax liability that you may take advantage of in the future.
> Name three tax credits that a college student might take advantage of while still in school or during the first few years after graduation.
> 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?
> Many college students choose not to file a federal income tax return, assuming that the income taxes withheld by employers “probably” will cover their tax liability. Is such an assumption correct? What are the negatives of this practice if the employers
> What can a person try to do to genuinely control spending to better achieve financial success?
> You have been asked to give a brief speech on how to achieve financial success and financial security. Use the five steps in the financial planning process and the building blocks to achieving financial success in your speech. Outline your speech.
> Do you have a budget or spending plan? Why or why not? What do you think are the two major reasons why people do not make formal written budgets?
> Of the financial ratios described in this chapter, which two might be most revealing for the typical college student?
> College students often have little income and many expenses. Does this reduce or increase the importance of completing a cash-flow statement on a monthly basis? Why or why not?
> What are two of your most important personal values? Give an example of how each of those values might influence your financial plans.
> What is the biggest budget-related mistake that you have made? What would you do differently now?
> During slow economic times, the federal government’s budgeting priority often is to borrow so it can spend more money than it takes in. What happens to families that try that, and why?
> 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.
> What would you do if you inherited $3,000 from an aunt? Identify three options.
> Thinking about some common mistakes that people make in job interviews, which three are the worst? Make a short list of things people should do to improve success in an interview.
> What are some common mistakes that people make in personal finance? Name two that might be the worst, and why?
> Samantha Beliveau of Ames, Iowa, is a senior in college, majoring in nutrition. She anticipates getting married a year or so after graduation. Samantha has only one elective course remaining and is going to choose between an advanced class in sociology a
> Where is the United States in the economic cycle now, and where does it seem to be heading? List some indicators that suggest in which direction it may move.
> List three interviewing tips for new college graduates looking for employment when in many parts of the country a growing job market exists.
> You plan to retire in 40 years. To provide for your retirement, you initiate a savings program of $4,000 per year yielding 7 percent. What will be the value of the retirement fund after 40 years? (Hint: Use Appendix A.3 or visit the Garman/Forgue compan
> You want to create a college fund for a child who is now 3 years old. The fund should grow to $60,000 in 15 years. If an investment available to you will yield 6 percent per year, how much must you invest in a lump sum now to realize the $60,000 when nee
> Isabel Lopez, from Lewiston, Idaho, is age 19, and she recently received an inheritance of $50,000 from her grandmother’s estate. She plans to use the money for the down payment on a home in ten years when she finishes her education. Ri
> Invest Now or Later? Twins Natalie and Kaitlyn are both age 27. They both live in Warren, Ohio. Beginning at age 27, Natalie invests $2,000 per year for ten years and then never sets aside another penny. Kaitlyn waits ten years and then invests $2,000 pe
> What would be the marginal tax rate for a single person who has a taxable income of (a) $31 ,560, (b) $58,150, (c) $66,450, and (d) $100,580? (Hint: Use Table 4-2.) Table 4-2: Table 4-2 Tax Rate Schedules DO IT IN CLASS Single Individuals If taxable
> What would be the tax liability for a single taxpayer who has a gross income of $50,050?
> Leyia and Larry Hartley of Columbus, Ohio have decided to start a family next year, so they are looking over their budget (illustrated in Table 3-5 as the “young married couple”). Leyia thinks that she can go on half-s
> Cody Sebastian, of Lubbock, Texas, earns $60,000 a year. He pays 30 percent of his gross income in federal, state, and local taxes. He has fixed expenses in addition to taxes of $1,800 per month and variable expenses that average $1,400 per month. What i
> Survey two relatives or friends and ask about their decision-making process when they most recently bought a vehicle. Find out if they thought about the opportunity costs when making the purchase. Also ask if they used marginal costs in their thinking. M
> Review the financial statements of Victor and Maria Hernandez (Table 3-2 and Table 3-3) and the financial ratios on page 87 and respond to the following questions: (a) How would you interpret their investment assets to total assets ratio? The Hernandez
> Tyler Winkle’s employer in Pittsburgh makes a matching contribution of $2,000 a year to his 401(k) retirement account at work. If the dollar amount of the employer’s contribution increases 4 percent annually, how much will the employer contribute to the
> Using the Rule of 72, calculate how quickly $1,000 will double to $2,000 at interest rates of 2 percent, 4 percent, 6 percent, 8 percent, and 10 percent.
> 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.
> Julia has recently undergone a severe career crisis. After nearly ten years as a professional engineer, her position was phased out by her company due to a loss of government contracts, and she has been offered a position in the marketing department. The
> Jacob Marchese of Vancouver, Washington, is the credit manager for a regional chain of department stores. He has been asked to join a panel of community members and make a ten-minute speech to graduating high school seniors on the topic “Using Credit Wis
> Julia has been thinking about the purchase of a boat. As a teenager, she was an avid water skier at her parents’ summer home. Now that she has moved away, she wants to renew her hobby at a lake nearby. Julia recently received a raise of $200 per month an
> Victor and Maria have always enjoyed a close relationship with Maria’s niece Teresa, who graduated from college with a pharmacy degree. Teresa recently asked Maria for some assistance with her finances now that her education debts are coming due. She owe
> Harry and Belinda have a substantial annual joint income—more than $125,000, in fact. Nevertheless, they expect to experience some cash-flow deficits during the months of November and December of the upcoming year (see Tables 3-6 and 3-
> Throughout this book, we will present a continuing narrative about Victor and Maria Hernandez. Following is a brief description of the lives of this couple. Victor and Maria, both in their late 30s, have two children: Jacob, age 13, and Nicholas, age 15.
> 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
> Julia’s six-figure salary has allowed her to build up a considerable cash reserve of over $20,000. She initially had basic checking and savings accounts. She also has a credit card with her bank that she uses to make most of her purchases, thereby earnin
> Fast The Hernandez family is experiencing some financial pressures, even though the couple has a combined income of $85,000. Also, their eldest son, Joseph, will start college in only three years. Maria is contemplating going to work full time to add abo
> Review Figure 4-1 on page 117 and comment on the logic of how different segments of Victoria Bassett’s income is taxed. Figure 4-1: Figure 4-1 How Your Income Is Really Taxed (Example: Victoria Bassett with a $60,000 gross income,
> Carson Wentz, of Philadelphia, determined the following tax information: salary, $144,000; interest earned, $2,000; qualified retirement plan contribution, $6,000; personal exemption, $4,050; itemized deductions, $10,000. Filing single, calculate Carson’
> Jared Goff, of Los Angeles, determined the following tax information: gross salary, $160,000; interest earned, $2,000; IRA contribution, $5,000; personal exemption, $4,050; and itemized deductions, $8,000. Calculate Jared’s taxable income and tax liabili
> Find the tax liabilities based on the taxable income of the following people: (a) married couple, $92,225; (b) married couple, $74,170; (c) single person, $27, 880; (d) single person, $56,060. (Hint: Use Table 4-3.)
> Describe two professional certification programs for financial planners.
> What are the four different ways financial planners may be compensated?
> In January, Harry and Belinda Johnson had $10,660 in monetary assets (see page 109): $1,100 in cash on hand; $1,200 in a statement savings account at First Credit Union earning 1.0 percent interest; $4,000 in a statement savings account at the Far West S
> How does a professional financial planner differ from a local lawyer or insurance person in your community?
> Identify three ways you might more effectively communicate about money matters.
> Explain why it is difficult for many people in relationships to talk about money matters.
> Explain what a cash-flow calendar accomplishes. Name three techniques to control spending.
> How might one go about revising budget estimates to create a balanced budget?
> 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.
> List two ways you can maximize the benefits from a tax-sheltered retirement program.
> Create a math example of why many employees participate in a tax-sheltered employee benefit plan, such as an HSA or 401(k) plan
> 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.