SOLUTIONS MANUAL
TU
Personal Finance
VI
Jack R. Kapoor, Les R. Dlabay, Robert J. Hughes, and Melissa M. Hart
──────────────────────────────────────────────────
A2
14th Edition
6_
AP
PR
OV
ED
??
,ST
TABLE OF CONTENTS
UV
Solutions Manual: Personal Finance, 14th Edition
By Jack R. Kapoor, Les R. Dlabay, Robert J. Hughes, and Melissa Hart
Chapter 1 Personal Finance Basics and the Time Value of Money
IA
Chapter 2 Financial Aspects of Career Planning
Chapter 3 Money Management Strategy: Financial Statements and Budgeting
26
Chapter 4 Planning Your Tax Strategy
Chapter 5 Financial Services: Savings Plans and Payment Methods
Chapter 6 Introduction to Consumer Credit
_A
Chapter 7 Choosing a Source of Credit: The Costs of Credit Alternatives
Chapter 8 Consumer Purchasing Strategies and Legal Protection
Chapter 9 The Housing Decision: Factors and Finances
PP
Chapter 10 Property and Motor Vehicle Insurance
Chapter 11 Health, Disability, and Long-Term Care Insurance
Chapter 12 Life Insurance
RO
Chapter 13 Investing Fundamentals
Chapter 14 Investing in Stocks
Chapter 15 Investing in Bonds
VE
Chapter 16 Investing in Mutual Funds
Chapter 17 Investing in Real Estate and Other Investment Alternatives
Chapter 18 Starting Early: Retirement Planning
D?
Chapter 19 Estate Planning
?
1
, Kapoor, Personal Finance, 14e
ST
Chapter 1 Solutions
1. Calculating the Future Value of Property. Josh Collins plans to buy a house for $210,000. If that real
UV
estate is expected to increase in value by 3 percent each year, what will its approximate value be six
years from now?
Solution: $210,000 1.194 = $250,740
LO: 1-2
IA
Topic: Calculating the Future Value of Property
LOD: Intermediate
Bloom tag: Application
26
2. Using the Rule of 72. 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?
_A
b. If you earn 10 percent on your investments, how long will it take for your money to double?
c. At an annual interest rate of 5 percent, how long will it take for your savings to double?
Solution:
a. about 12 years (72/6)
PP
b. about 7.2 years (72/10)
c. about 14.4 years (72/5)
LO: 1-2
Topic: Using the Rule of 72
RO
LOD: Easy
Bloom tag: Application
3. Determining the Inflation Rate. In 2018, selected automobiles had an average cost of $16,000. The
VE
average cost of those same automobiles is now $24,000. What was the rate of increase for these
automobiles between the two time periods?
Solution: ($24,000 – $16,000) / $16,000 = .50 (50 percent)
LO: 1-2
D?
Topic: Determining the Inflation Rate
LOD: Medium
Bloom tag: Application
?
4. Computing Future Living Expenses. A family spends $46,000 a year for living expenses. If prices
increase by 2 percent a year for the next three years, what amount will the family need for their living
expenses after three years?
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw Hill LLC.
, Solution: $46,000 1.061 = $48,806 (Future value of single amount for 3 years at 2 percent)
LO: 1-2
ST
Topic: Computing Future Living Expenses
LOD: Easy
Bloom tag: Application
UV
5. Calculating Earnings on Savings. What would be the yearly earnings for a person with $6,000 in
savings at an annual interest rate of 2.5 percent?
Solution: $6,000 .025 = $150
IA
LO: 1-4
Topic: Calculating Earnings on Savings
LOD: Easy
26
Bloom tag: Application
6. Computing the Time Value of Money. Using a financial calculator or time value of money tables in the
_A
Chapter Appendix, calculate the following.
a. The future value of $450 six years from now at 7 percent.
b. The future value of $900 saved each year for 10 years at 8 percent.
c. The amount a person would have to deposit today (present value) at a 6 percent interest rate to
have $1,000 five years from now.
PP
d. The amount a person would have to deposit today to be able to take out $600 a year for 10 years
from an account earning 8 percent.
Solution: a. $450 1.501 = $675.45
RO
b. $900 14.487 = $13,038.30
c. $1,000 0.747 = $747
d. $600 6.710 = $4,026
LO: 1-4
Topic: Computing the Time Value of Money
VE
LOD: Medium
Bloom tag: Application
7. Calculating the Future Value of a Series of Amounts. Elaine Romberg prepares her own income tax
D?
return each year. A tax preparer would charge her $70 for this service. Over a period of 10 years, how
much does Elaine gain from preparing her own tax return? Assume she can earn 3 percent on her
savings.
?
Solution: $70 11.464 = $802.48
LO: 1-4
Topic: Calculating the Future Value of a Series of Amounts
LOD: Difficult
Bloom tag: Application
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw Hill LLC.
TU
Personal Finance
VI
Jack R. Kapoor, Les R. Dlabay, Robert J. Hughes, and Melissa M. Hart
──────────────────────────────────────────────────
A2
14th Edition
6_
AP
PR
OV
ED
??
,ST
TABLE OF CONTENTS
UV
Solutions Manual: Personal Finance, 14th Edition
By Jack R. Kapoor, Les R. Dlabay, Robert J. Hughes, and Melissa Hart
Chapter 1 Personal Finance Basics and the Time Value of Money
IA
Chapter 2 Financial Aspects of Career Planning
Chapter 3 Money Management Strategy: Financial Statements and Budgeting
26
Chapter 4 Planning Your Tax Strategy
Chapter 5 Financial Services: Savings Plans and Payment Methods
Chapter 6 Introduction to Consumer Credit
_A
Chapter 7 Choosing a Source of Credit: The Costs of Credit Alternatives
Chapter 8 Consumer Purchasing Strategies and Legal Protection
Chapter 9 The Housing Decision: Factors and Finances
PP
Chapter 10 Property and Motor Vehicle Insurance
Chapter 11 Health, Disability, and Long-Term Care Insurance
Chapter 12 Life Insurance
RO
Chapter 13 Investing Fundamentals
Chapter 14 Investing in Stocks
Chapter 15 Investing in Bonds
VE
Chapter 16 Investing in Mutual Funds
Chapter 17 Investing in Real Estate and Other Investment Alternatives
Chapter 18 Starting Early: Retirement Planning
D?
Chapter 19 Estate Planning
?
1
, Kapoor, Personal Finance, 14e
ST
Chapter 1 Solutions
1. Calculating the Future Value of Property. Josh Collins plans to buy a house for $210,000. If that real
UV
estate is expected to increase in value by 3 percent each year, what will its approximate value be six
years from now?
Solution: $210,000 1.194 = $250,740
LO: 1-2
IA
Topic: Calculating the Future Value of Property
LOD: Intermediate
Bloom tag: Application
26
2. Using the Rule of 72. 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?
_A
b. If you earn 10 percent on your investments, how long will it take for your money to double?
c. At an annual interest rate of 5 percent, how long will it take for your savings to double?
Solution:
a. about 12 years (72/6)
PP
b. about 7.2 years (72/10)
c. about 14.4 years (72/5)
LO: 1-2
Topic: Using the Rule of 72
RO
LOD: Easy
Bloom tag: Application
3. Determining the Inflation Rate. In 2018, selected automobiles had an average cost of $16,000. The
VE
average cost of those same automobiles is now $24,000. What was the rate of increase for these
automobiles between the two time periods?
Solution: ($24,000 – $16,000) / $16,000 = .50 (50 percent)
LO: 1-2
D?
Topic: Determining the Inflation Rate
LOD: Medium
Bloom tag: Application
?
4. Computing Future Living Expenses. A family spends $46,000 a year for living expenses. If prices
increase by 2 percent a year for the next three years, what amount will the family need for their living
expenses after three years?
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw Hill LLC.
, Solution: $46,000 1.061 = $48,806 (Future value of single amount for 3 years at 2 percent)
LO: 1-2
ST
Topic: Computing Future Living Expenses
LOD: Easy
Bloom tag: Application
UV
5. Calculating Earnings on Savings. What would be the yearly earnings for a person with $6,000 in
savings at an annual interest rate of 2.5 percent?
Solution: $6,000 .025 = $150
IA
LO: 1-4
Topic: Calculating Earnings on Savings
LOD: Easy
26
Bloom tag: Application
6. Computing the Time Value of Money. Using a financial calculator or time value of money tables in the
_A
Chapter Appendix, calculate the following.
a. The future value of $450 six years from now at 7 percent.
b. The future value of $900 saved each year for 10 years at 8 percent.
c. The amount a person would have to deposit today (present value) at a 6 percent interest rate to
have $1,000 five years from now.
PP
d. The amount a person would have to deposit today to be able to take out $600 a year for 10 years
from an account earning 8 percent.
Solution: a. $450 1.501 = $675.45
RO
b. $900 14.487 = $13,038.30
c. $1,000 0.747 = $747
d. $600 6.710 = $4,026
LO: 1-4
Topic: Computing the Time Value of Money
VE
LOD: Medium
Bloom tag: Application
7. Calculating the Future Value of a Series of Amounts. Elaine Romberg prepares her own income tax
D?
return each year. A tax preparer would charge her $70 for this service. Over a period of 10 years, how
much does Elaine gain from preparing her own tax return? Assume she can earn 3 percent on her
savings.
?
Solution: $70 11.464 = $802.48
LO: 1-4
Topic: Calculating the Future Value of a Series of Amounts
LOD: Difficult
Bloom tag: Application
© McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw Hill LLC.
