Kapoor, jPersonal jFinance, j14e
Chapter j1 jSolutions
1. Calculating jthe jFuture jValue jof jProperty. jJosh jCollins jplans jto jbuy ja jhouse jfor j$210,000. jIf jthat
jrealjestate jis jexpected jto jincrease jin jvalue jby j3 jpercent jeach jyear, jwhat jwill jits japproximate
jvalue jbe jsix jyears jfrom jnow?
Solution: j $210,000 j j 1.194 j=
j$250,740jLO: j1-2
Topic: jCalculating jthe jFuture jValue jof
jPropertyjLOD: j Intermediate
Bloom jtag: jApplication
2. Using jthe jRule jof j72. jUsing jthe jrule jof j72, japproximate jthe jfollowing jamounts.
a. If jthe jvalue jof jland jin jan jarea jis jincreasing j6 jpercent ja jyear, jhow jlong jwill jit jtake jfor
jpropertyjvalues jto jdouble?
b. If jyou jearn j10 jpercent jon jyour jinvestments, jhow jlong jwill jit jtake jfor jyour jmoney jto jdouble?
c. At jan jannual jinterest jrate jof j5 jpercent, jhow jlong jwill jit jtake jfor jyour jsavings jto jdouble?
Solution:
a. about j12 jyears j(72/6)
b. about j7.2 jyears j(72/10)
c. about j14.4 jyears
j(72/5)jLO: j1-2
Topic: jUsing jthe jRule jof
j72jLOD: jEasy
Bloom jtag: jApplication
3. Determining jthe jInflation jRate. jIn j2018, jselected jautomobiles jhad jan javerage jcost jof j$16,000.
jThejaverage jcost jof jthose jsame jautomobiles jis jnow j$24,000. jWhat jwas jthe jrate jof jincrease jfor
jthese jautomobiles jbetween jthe jtwo jtime jperiods?
Solution: j($24,000 j– j$16,000) j/ j$16,000 j= j.50 j(50
jpercent)jLO: j1-2
Topic: jDetermining jthe jInflation
jRatejLOD: j Medium
© jMcGraw jHill jLLC. jAll jrights jreserved. jNo jreproduction jor jdistribution jwithout jthe jprior jwritten
jconsent jofjMcGraw jHill jLLC.
mynursytest.store
,Bloom jtag: jApplication
4. Computing jFuture jLiving jExpenses. jA jfamily jspends j$46,000 ja jyear jfor jliving jexpenses. jIf jprices
jincrease jby j2 jpercent ja jyear jfor jthe jnext jthree jyears, jwhat jamount jwill jthe jfamily jneed jfor jtheir
jlivingjexpenses jafter jthree jyears?
Solution: j $46,000 j j 1.061 j= j$48,806 j(Future jvalue jof jsingle jamount jfor j3 jyears jat j2
jpercent)jLO: j1-2
Topic: jComputing jFuture jLiving jExpenses
© jMcGraw jHill jLLC. jAll jrights jreserved. jNo jreproduction jor jdistribution jwithout jthe jprior jwritten
jconsent jofjMcGraw jHill jLLC.
mynursytest.store
,LOD: j Easy
Bloom jtag: jApplication
5. Calculating jEarnings jon jSavings. jWhat jwould jbe jthe jyearly jearnings jfor ja jperson jwith
j$6,000 jinjsavings jat jan jannual jinterest jrate jof j2.5 jpercent?
Solution: j $6,000 j j .025 j=
j$150jLO: j1-4
Topic: jCalculating jEarnings jon
jSavingsjLOD: jEasy
Bloom jtag: jApplication
6. Computing jthe jTime jValue jof jMoney. jUsing ja jfinancial jcalculator jor jtime jvalue jof jmoney jtables
jin jthejChapter jAppendix, jcalculate jthe jfollowing.
a. The jfuture jvalue jof j$450 jsix jyears jfrom jnow jat j7 jpercent.
b. The jfuture jvalue jof j$900 jsaved jeach jyear jfor j10 jyears jat j8 jpercent.
c. The jamount ja jperson jwould jhave jto jdeposit jtoday j(present jvalue) jat ja j6 jpercent jinterest
jrate jtojhave j$1,000 jfive jyears jfrom jnow.
d. The jamount ja jperson jwould jhave jto jdeposit jtoday jto jbe jable jto jtake jout j$600 ja jyear jfor j10
jyearsjfrom jan jaccount jearning j8 jpercent.
Solution: j a. j$450 j j 1.501 j=
j$675.45jb. j$900 j j 14.487 j=
j$13,038.30
c. j$1,000 j j 0.747 j= j$747
d. j$600 j j 6.710 j=
j$4,026jLO: j1-4
Topic: jComputing jthe jTime jValue jof
jMoneyjLOD: jMedium
Bloom jtag: jApplication
7. Calculating jthe jFuture jValue jof ja jSeries jof jAmounts. jElaine jRomberg jprepares jher jown jincome
jtax jreturn jeach jyear. jA jtax jpreparer jwould jcharge jher j$70 jfor jthis jservice. jOver ja jperiod jof j10
jyears, jhowjmuch jdoes jElaine jgain jfrom jpreparing jher jown jtax jreturn? jAssume jshe jcan jearn j3
jpercent jon jher jsavings.
Solution: j $70 j j 11.464 j=
j$802.48jLO: j1-4
Topic: jCalculating jthe jFuture jValue jof ja jSeries jof
jAmountsjLOD: j Difficult
Bloom jtag: jApplication
8. Calculating jthe jTime jValue jof jMoney jfor jSavings jGoals. jIf jyou jdesire jto jhave j$20,000 jfor ja
jdown jpayment jfor ja jhouse jin jfive jyears, jwhat jamount jwould jyou jneed jto jdeposit jtoday?
jAssume jthat jyourjmoney jwill jearn j4 jpercent.
© jMcGraw jHill jLLC. jAll jrights jreserved. jNo jreproduction jor jdistribution jwithout jthe jprior jwritten
jconsent jofjMcGraw jHill jLLC.
mynursytest.store
, Solution: j$20,000 jx j0.822 j(present jvalue jof jsingle jamount) j=
j$16,440jLO: j1-4
Topic: jCalculating jthe jTime jValue jof jMoney jfor jSavings
jGoalsjLOD: jIntermediate
Bloom jtag: jApplication
9. Calculating jthe jPresent jValue jof ja jSeries. jPete jMorton jis jplanning jto jgo jto jgraduate jschool jin ja
jprogramjof jstudy jthat jwill jtake jthree jyears. jPete jwants jto jhave j$15,000 javailable jeach jyear jfor
jvarious jschool jandjliving jexpenses. jIf jhe jearns j4 jpercent jon jhis jmoney, jhow jmuch jmust jbe
jdeposited jat jthe jstart jof jhis jstudies jto jbe jable jto jwithdraw j$15,000 ja jyear jfor jthree jyears?
Solution: j $15,000 jx j2.775 j(present jvalue jof ja jseries) j=
j$41,625jLO: j1-4
Topic: jCalculating jthe jPresent jValue jof ja
jSeriesjLOD: j Hard
Bloom jtag: jApplication
10. Using jthe jTime jValue jof jMoney jfor jRetirement jPlanning. jCarla jLopez jdeposits j$3,400 ja jyear jinto
jherjretirement jaccount. jIf jthese jfunds jhave jan javerage jearning jof j9 jpercent jover jthe j40 jyears
juntil jher jretirement, jwhat jwill jbe jthe jvalue jof jher jretirement jaccount?
Solution: j$3,400 jx j337.890 j(future jvalue jof ja jseries) j=
j$1,284,826jLO: j1-4
Topic: jUsing jthe jTime jValue jof jMoney jfor jRetirement
jPlanningjLOD: j Intermediate
Bloom jtag: jApplication
11. Calculating jthe jValue jof jReduced jSpending. jIf ja jperson jspends j$15 ja jweek jon jcoffee j(assume
j$750 jajyear), jwhat jwould jbe jthe jfuture jvalue jof jthat jamount jover j10 jyears jif jthe jfunds jwere
jdeposited jin jan jaccount jearning j3 jpercent?
Solution: j $750 jx j11.464 j(future jvalue jof ja jseries) j=
j$8,598.jLO: j1-4
Topic: jCalculating jthe jValue jof jReduced
jSpendingjLOD: jEasy
Bloom jtag: jApplication
12. Calculating jthe jPresent jValue jof jFuture jCash jFlows. jA jfinancial jcompany jadvertises jon jtelevision
jthatjthey jwill jpay jyou j$60,000 jnow jin jexchange jfor jannual jpayments jof j$10,000 jthat jyou jare
jexpected jto jreceive jfor ja jlegal jsettlement jover jthe jnext j10 jyears. jIf jyou jestimate jthe jtime jvalue jof
jmoney jat j10 jpercent, jwould jyou jaccept jthis joffer?
Solution: j (1) jcalculate jthe jfuture jvalue jof jthe jannual jpayment $10,000 jX j15.937 j= j$159,370
(2) calculate jthe jpresent jvalue jof jthat jfuture jflow: $159,370 jX j0.386 j= j$61,516.82
(3) the j$60,000 jbeing joffered jnow jis jless jthan jthe jpresent jvalue jof jthe jfuture jflow.
© jMcGraw jHill jLLC. jAll jrights jreserved. jNo jreproduction jor jdistribution jwithout jthe jprior jwritten
jconsent jofjMcGraw jHill jLLC.
mynursytest.store
Chapter j1 jSolutions
1. Calculating jthe jFuture jValue jof jProperty. jJosh jCollins jplans jto jbuy ja jhouse jfor j$210,000. jIf jthat
jrealjestate jis jexpected jto jincrease jin jvalue jby j3 jpercent jeach jyear, jwhat jwill jits japproximate
jvalue jbe jsix jyears jfrom jnow?
Solution: j $210,000 j j 1.194 j=
j$250,740jLO: j1-2
Topic: jCalculating jthe jFuture jValue jof
jPropertyjLOD: j Intermediate
Bloom jtag: jApplication
2. Using jthe jRule jof j72. jUsing jthe jrule jof j72, japproximate jthe jfollowing jamounts.
a. If jthe jvalue jof jland jin jan jarea jis jincreasing j6 jpercent ja jyear, jhow jlong jwill jit jtake jfor
jpropertyjvalues jto jdouble?
b. If jyou jearn j10 jpercent jon jyour jinvestments, jhow jlong jwill jit jtake jfor jyour jmoney jto jdouble?
c. At jan jannual jinterest jrate jof j5 jpercent, jhow jlong jwill jit jtake jfor jyour jsavings jto jdouble?
Solution:
a. about j12 jyears j(72/6)
b. about j7.2 jyears j(72/10)
c. about j14.4 jyears
j(72/5)jLO: j1-2
Topic: jUsing jthe jRule jof
j72jLOD: jEasy
Bloom jtag: jApplication
3. Determining jthe jInflation jRate. jIn j2018, jselected jautomobiles jhad jan javerage jcost jof j$16,000.
jThejaverage jcost jof jthose jsame jautomobiles jis jnow j$24,000. jWhat jwas jthe jrate jof jincrease jfor
jthese jautomobiles jbetween jthe jtwo jtime jperiods?
Solution: j($24,000 j– j$16,000) j/ j$16,000 j= j.50 j(50
jpercent)jLO: j1-2
Topic: jDetermining jthe jInflation
jRatejLOD: j Medium
© jMcGraw jHill jLLC. jAll jrights jreserved. jNo jreproduction jor jdistribution jwithout jthe jprior jwritten
jconsent jofjMcGraw jHill jLLC.
mynursytest.store
,Bloom jtag: jApplication
4. Computing jFuture jLiving jExpenses. jA jfamily jspends j$46,000 ja jyear jfor jliving jexpenses. jIf jprices
jincrease jby j2 jpercent ja jyear jfor jthe jnext jthree jyears, jwhat jamount jwill jthe jfamily jneed jfor jtheir
jlivingjexpenses jafter jthree jyears?
Solution: j $46,000 j j 1.061 j= j$48,806 j(Future jvalue jof jsingle jamount jfor j3 jyears jat j2
jpercent)jLO: j1-2
Topic: jComputing jFuture jLiving jExpenses
© jMcGraw jHill jLLC. jAll jrights jreserved. jNo jreproduction jor jdistribution jwithout jthe jprior jwritten
jconsent jofjMcGraw jHill jLLC.
mynursytest.store
,LOD: j Easy
Bloom jtag: jApplication
5. Calculating jEarnings jon jSavings. jWhat jwould jbe jthe jyearly jearnings jfor ja jperson jwith
j$6,000 jinjsavings jat jan jannual jinterest jrate jof j2.5 jpercent?
Solution: j $6,000 j j .025 j=
j$150jLO: j1-4
Topic: jCalculating jEarnings jon
jSavingsjLOD: jEasy
Bloom jtag: jApplication
6. Computing jthe jTime jValue jof jMoney. jUsing ja jfinancial jcalculator jor jtime jvalue jof jmoney jtables
jin jthejChapter jAppendix, jcalculate jthe jfollowing.
a. The jfuture jvalue jof j$450 jsix jyears jfrom jnow jat j7 jpercent.
b. The jfuture jvalue jof j$900 jsaved jeach jyear jfor j10 jyears jat j8 jpercent.
c. The jamount ja jperson jwould jhave jto jdeposit jtoday j(present jvalue) jat ja j6 jpercent jinterest
jrate jtojhave j$1,000 jfive jyears jfrom jnow.
d. The jamount ja jperson jwould jhave jto jdeposit jtoday jto jbe jable jto jtake jout j$600 ja jyear jfor j10
jyearsjfrom jan jaccount jearning j8 jpercent.
Solution: j a. j$450 j j 1.501 j=
j$675.45jb. j$900 j j 14.487 j=
j$13,038.30
c. j$1,000 j j 0.747 j= j$747
d. j$600 j j 6.710 j=
j$4,026jLO: j1-4
Topic: jComputing jthe jTime jValue jof
jMoneyjLOD: jMedium
Bloom jtag: jApplication
7. Calculating jthe jFuture jValue jof ja jSeries jof jAmounts. jElaine jRomberg jprepares jher jown jincome
jtax jreturn jeach jyear. jA jtax jpreparer jwould jcharge jher j$70 jfor jthis jservice. jOver ja jperiod jof j10
jyears, jhowjmuch jdoes jElaine jgain jfrom jpreparing jher jown jtax jreturn? jAssume jshe jcan jearn j3
jpercent jon jher jsavings.
Solution: j $70 j j 11.464 j=
j$802.48jLO: j1-4
Topic: jCalculating jthe jFuture jValue jof ja jSeries jof
jAmountsjLOD: j Difficult
Bloom jtag: jApplication
8. Calculating jthe jTime jValue jof jMoney jfor jSavings jGoals. jIf jyou jdesire jto jhave j$20,000 jfor ja
jdown jpayment jfor ja jhouse jin jfive jyears, jwhat jamount jwould jyou jneed jto jdeposit jtoday?
jAssume jthat jyourjmoney jwill jearn j4 jpercent.
© jMcGraw jHill jLLC. jAll jrights jreserved. jNo jreproduction jor jdistribution jwithout jthe jprior jwritten
jconsent jofjMcGraw jHill jLLC.
mynursytest.store
, Solution: j$20,000 jx j0.822 j(present jvalue jof jsingle jamount) j=
j$16,440jLO: j1-4
Topic: jCalculating jthe jTime jValue jof jMoney jfor jSavings
jGoalsjLOD: jIntermediate
Bloom jtag: jApplication
9. Calculating jthe jPresent jValue jof ja jSeries. jPete jMorton jis jplanning jto jgo jto jgraduate jschool jin ja
jprogramjof jstudy jthat jwill jtake jthree jyears. jPete jwants jto jhave j$15,000 javailable jeach jyear jfor
jvarious jschool jandjliving jexpenses. jIf jhe jearns j4 jpercent jon jhis jmoney, jhow jmuch jmust jbe
jdeposited jat jthe jstart jof jhis jstudies jto jbe jable jto jwithdraw j$15,000 ja jyear jfor jthree jyears?
Solution: j $15,000 jx j2.775 j(present jvalue jof ja jseries) j=
j$41,625jLO: j1-4
Topic: jCalculating jthe jPresent jValue jof ja
jSeriesjLOD: j Hard
Bloom jtag: jApplication
10. Using jthe jTime jValue jof jMoney jfor jRetirement jPlanning. jCarla jLopez jdeposits j$3,400 ja jyear jinto
jherjretirement jaccount. jIf jthese jfunds jhave jan javerage jearning jof j9 jpercent jover jthe j40 jyears
juntil jher jretirement, jwhat jwill jbe jthe jvalue jof jher jretirement jaccount?
Solution: j$3,400 jx j337.890 j(future jvalue jof ja jseries) j=
j$1,284,826jLO: j1-4
Topic: jUsing jthe jTime jValue jof jMoney jfor jRetirement
jPlanningjLOD: j Intermediate
Bloom jtag: jApplication
11. Calculating jthe jValue jof jReduced jSpending. jIf ja jperson jspends j$15 ja jweek jon jcoffee j(assume
j$750 jajyear), jwhat jwould jbe jthe jfuture jvalue jof jthat jamount jover j10 jyears jif jthe jfunds jwere
jdeposited jin jan jaccount jearning j3 jpercent?
Solution: j $750 jx j11.464 j(future jvalue jof ja jseries) j=
j$8,598.jLO: j1-4
Topic: jCalculating jthe jValue jof jReduced
jSpendingjLOD: jEasy
Bloom jtag: jApplication
12. Calculating jthe jPresent jValue jof jFuture jCash jFlows. jA jfinancial jcompany jadvertises jon jtelevision
jthatjthey jwill jpay jyou j$60,000 jnow jin jexchange jfor jannual jpayments jof j$10,000 jthat jyou jare
jexpected jto jreceive jfor ja jlegal jsettlement jover jthe jnext j10 jyears. jIf jyou jestimate jthe jtime jvalue jof
jmoney jat j10 jpercent, jwould jyou jaccept jthis joffer?
Solution: j (1) jcalculate jthe jfuture jvalue jof jthe jannual jpayment $10,000 jX j15.937 j= j$159,370
(2) calculate jthe jpresent jvalue jof jthat jfuture jflow: $159,370 jX j0.386 j= j$61,516.82
(3) the j$60,000 jbeing joffered jnow jis jless jthan jthe jpresent jvalue jof jthe jfuture jflow.
© jMcGraw jHill jLLC. jAll jrights jreserved. jNo jreproduction jor jdistribution jwithout jthe jprior jwritten
jconsent jofjMcGraw jHill jLLC.
mynursytest.store
