, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
d d d d d d d d
Kapoor, Personal Finance, 14e
d d d
Chapterd1dSolutions
1. CalculatingdthedFuturedValuedofdProperty.dJoshdCollinsdplansdtodbuydadhousedford$210,000.dIfdthatdrealde
statedisdexpecteddtodincreasedindvaluedbyd3dpercentdeachdyear,dwhatdwillditsdapproximatedvaluedbedsixdyea
rsdfromdnow?
Solution:d $210,000d d 1.194d=d$250,740d
LO:d1-2
Topic:dCalculatingdthedFuturedValuedofdPropertyd
LOD:dIntermediate
Bloomdtag:dApplication
2. UsingdthedRuledofd72.dUsingdthedruledofd72,dapproximatedthedfollowingdamounts.
a. Ifdthedvaluedofdlanddindandareadisdincreasingd6dpercentdadyear,dhowdlongdwillditdtakedfordpropertydv
aluesdtoddouble?
b. Ifdyoudearnd10dpercentdondyourdinvestments,dhowdlongdwillditdtakedfordyourdmoneydtoddouble?
c. Atdandannualdinterestdratedofd5dpercent,dhowdlongdwillditdtakedfordyourdsavingsdtoddouble?
Solution:
a. aboutd12dyearsd(72/6)
b. aboutd7.2dyearsd(72/10)
c. aboutd14.4dyearsd(72/5)d
LO:d1-2
Topic:dUsingdthedRuledofd72d
LOD:dEasy
Bloomdtag:dApplication
3. DeterminingdthedInflationdRate.dInd2018,dselecteddautomobilesdhaddandaveragedcostdofd$16,000.dTheda
veragedcostdofdthosedsamedautomobilesdisdnowd$24,000.dWhatdwasdthedratedofdincreasedfordthesedauto
mobilesdbetweendthedtwodtimedperiods?
Solution:d($24,000d–
d$16,000)d/d$16,000d=d.50d(50dpercent)dLO:d1-2
Topic:dDeterminingdthedInflationdRated
LOD:d Medium
Bloomdtag:dApplication
4. ComputingdFuturedLivingdExpenses.dAdfamilydspendsd$46,000dadyeardfordlivingdexpenses.dIfdpricesdincr
easedbyd2dpercentdadyeardfordthednextdthreedyears,dwhatdamountdwilldthedfamilydneeddfordtheirdlivingdexpen
sesdafterdthreedyears?
Solution:d $46,000d d 1.061d=d$48,806d(Futuredvaluedofdsingledamountdford3dyearsdatd2dpercent)dL
O:d1-2
Topic:dComputingdFuturedLivingdExpenses
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittendconsentdo
fdMcGrawdHilldLLC.
mynursytest.store
, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
d d d d d d d d
LOD:d Easy
Bloomdtag:dApplication
5. CalculatingdEarningsdondSavings.dWhatdwoulddbedthedyearlydearningsdfordadpersondwithd$6,000dinds
avingsdatdandannualdinterestdratedofd2.5dpercent?
Solution:d $6,000d d .025d=d$150d
LO:d1-4
Topic:dCalculatingdEarningsdondSavingsd
LOD:dEasy
Bloomdtag:dApplication
6. ComputingdthedTimedValuedofdMoney.dUsingdadfinancialdcalculatordordtimedvaluedofdmoneydtablesdindthedC
hapterdAppendix,dcalculatedthedfollowing.
a. Thedfuturedvaluedofd$450dsixdyearsdfromdnowdatd7dpercent.
b. Thedfuturedvaluedofd$900dsaveddeachdyeardford10dyearsdatd8dpercent.
c. Thedamountdadpersondwoulddhavedtoddepositdtodayd(presentdvalue)datdad6dpercentdinterestdratedtodh
aved$1,000dfivedyearsdfromdnow.
d. Thedamountdadpersondwoulddhavedtoddepositdtodaydtodbedabledtodtakedoutd$600dadyeardford10dyearsdfr
omdandaccountdearningd8dpercent.
Solution:d a.d$450d d 1.501d=d$675.45d
b.d$900d d 14.487d=d$13,038.30
c.d$1,000d d 0.747d=d$747
d.d$600d d 6.710d=d$4,026d
LO:d1-4
Topic:dComputingdthedTimedValuedofdMoneyd
LOD:dMedium
Bloomdtag:dApplication
7. CalculatingdthedFuturedValuedofdadSeriesdofdAmounts.dElainedRombergdpreparesdherdowndincomedtaxdret
urndeachdyear.dAdtaxdpreparerdwoulddchargedherd$70dfordthisdservice.dOverdadperioddofd10dyears,dhowdmuc
hddoesdElainedgaindfromdpreparingdherdowndtaxdreturn?dAssumedshedcandearnd3dpercentdondherdsavings.
Solution:d $70d d 11.464d=d$802.48d
LO:d1-4
Topic:dCalculatingdthedFuturedValuedofdadSeriesdofdAmountsd
LOD:d Difficult
Bloomdtag:dApplication
8. CalculatingdthedTimedValuedofdMoneydfordSavingsdGoals.dIfdyouddesiredtodhaved$20,000dfordaddowndpa
ymentdfordadhousedindfivedyears,dwhatdamountdwoulddyoudneeddtoddepositdtoday?dAssumedthatdyourdmo
neydwilldearnd4dpercent.
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittendconsentdo
fdMcGrawdHilldLLC.
mynursytest.store
, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
d d d d d d d d
Solution:d$20,000dxd0.822d(presentdvaluedofdsingledamount)d=d$16,440dL
O:d1-4
Topic:dCalculatingdthedTimedValuedofdMoneydfordSavingsdGoalsd
LOD:dIntermediate
Bloomdtag:dApplication
9. CalculatingdthedPresentdValuedofdadSeries.dPetedMortondisdplanningdtodgodtodgraduatedschooldindadprogramdo
fdstudydthatdwilldtakedthreedyears.dPetedwantsdtodhaved$15,000davailabledeachdyeardfordvariousdschooldanddliv
ingdexpenses.dIfdhedearnsd4dpercentdondhisdmoney,dhowdmuchdmustdbeddepositeddatdthedstartdofdhisdstudiesdtod
bedabledtodwithdrawd$15,000dadyeardfordthreedyears?
Solution:d $15,000dxd2.775d(presentdvaluedofdadseries)d=d$41,625d
LO:d1-4
Topic:dCalculatingdthedPresentdValuedofdadSeriesd
LOD:d Hard
Bloomdtag:dApplication
10. UsingdthedTimedValuedofdMoneydfordRetirementdPlanning.dCarladLopezddepositsd$3,400dadyeardintodherdr
etirementdaccount.dIfdthesedfundsdhavedandaveragedearningdofd9dpercentdoverdthed40dyearsduntildherdretire
ment,dwhatdwilldbedthedvaluedofdherdretirementdaccount?
Solution:d$3,400dxd337.890d(futuredvaluedofdadseries)d=d$1,284,826dLO:d
1-4
Topic:dUsingdthedTimedValuedofdMoneydfordRetirementdPlanningdLOD:d
Intermediate
Bloomdtag:dApplication
11. CalculatingdthedValuedofdReduceddSpending.dIfdadpersondspendsd$15dadweekdondcoffeed(assumed$750dady
ear),dwhatdwoulddbedthedfuturedvaluedofdthatdamountdoverd10dyearsdifdthedfundsdwereddepositeddindandacc
ountdearningd3dpercent?
Solution:d $750dxd11.464d(futuredvaluedofdadseries)d=d$8,598.d
LO:d1-4
Topic:dCalculatingdthedValuedofdReduceddSpendingd
LOD:dEasy
Bloomdtag:dApplication
12. CalculatingdthedPresentdValuedofdFuturedCashdFlows.dAdfinancialdcompanydadvertisesdondtelevisiondthatdt
heydwilldpaydyoud$60,000dnowdindexchangedfordannualdpaymentsdofd$10,000dthatdyoudaredexpecteddtodrece
ivedfordadlegaldsettlementdoverdthednextd10dyears.dIfdyoudestimatedthedtimedvaluedofdmoneydatd10dpercent,dw
oulddyoudacceptdthisdoffer?
Solution:d (1)dcalculatedthedfuturedvaluedofdthedannualdpayment $10,000dXd15.937d=d$159,370
(2) calculatedthedpresentdvaluedofdthatdfuturedflow: $159,370dXd0.386d=d$61,516.82
(3) thed$60,000dbeingdoffereddnowdisdlessdthandthedpresentdvaluedofdthedfuturedflow.
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittendconsentdo
fdMcGrawdHilldLLC.
mynursytest.store
d d d d d d d d
Kapoor, Personal Finance, 14e
d d d
Chapterd1dSolutions
1. CalculatingdthedFuturedValuedofdProperty.dJoshdCollinsdplansdtodbuydadhousedford$210,000.dIfdthatdrealde
statedisdexpecteddtodincreasedindvaluedbyd3dpercentdeachdyear,dwhatdwillditsdapproximatedvaluedbedsixdyea
rsdfromdnow?
Solution:d $210,000d d 1.194d=d$250,740d
LO:d1-2
Topic:dCalculatingdthedFuturedValuedofdPropertyd
LOD:dIntermediate
Bloomdtag:dApplication
2. UsingdthedRuledofd72.dUsingdthedruledofd72,dapproximatedthedfollowingdamounts.
a. Ifdthedvaluedofdlanddindandareadisdincreasingd6dpercentdadyear,dhowdlongdwillditdtakedfordpropertydv
aluesdtoddouble?
b. Ifdyoudearnd10dpercentdondyourdinvestments,dhowdlongdwillditdtakedfordyourdmoneydtoddouble?
c. Atdandannualdinterestdratedofd5dpercent,dhowdlongdwillditdtakedfordyourdsavingsdtoddouble?
Solution:
a. aboutd12dyearsd(72/6)
b. aboutd7.2dyearsd(72/10)
c. aboutd14.4dyearsd(72/5)d
LO:d1-2
Topic:dUsingdthedRuledofd72d
LOD:dEasy
Bloomdtag:dApplication
3. DeterminingdthedInflationdRate.dInd2018,dselecteddautomobilesdhaddandaveragedcostdofd$16,000.dTheda
veragedcostdofdthosedsamedautomobilesdisdnowd$24,000.dWhatdwasdthedratedofdincreasedfordthesedauto
mobilesdbetweendthedtwodtimedperiods?
Solution:d($24,000d–
d$16,000)d/d$16,000d=d.50d(50dpercent)dLO:d1-2
Topic:dDeterminingdthedInflationdRated
LOD:d Medium
Bloomdtag:dApplication
4. ComputingdFuturedLivingdExpenses.dAdfamilydspendsd$46,000dadyeardfordlivingdexpenses.dIfdpricesdincr
easedbyd2dpercentdadyeardfordthednextdthreedyears,dwhatdamountdwilldthedfamilydneeddfordtheirdlivingdexpen
sesdafterdthreedyears?
Solution:d $46,000d d 1.061d=d$48,806d(Futuredvaluedofdsingledamountdford3dyearsdatd2dpercent)dL
O:d1-2
Topic:dComputingdFuturedLivingdExpenses
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittendconsentdo
fdMcGrawdHilldLLC.
mynursytest.store
, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
d d d d d d d d
LOD:d Easy
Bloomdtag:dApplication
5. CalculatingdEarningsdondSavings.dWhatdwoulddbedthedyearlydearningsdfordadpersondwithd$6,000dinds
avingsdatdandannualdinterestdratedofd2.5dpercent?
Solution:d $6,000d d .025d=d$150d
LO:d1-4
Topic:dCalculatingdEarningsdondSavingsd
LOD:dEasy
Bloomdtag:dApplication
6. ComputingdthedTimedValuedofdMoney.dUsingdadfinancialdcalculatordordtimedvaluedofdmoneydtablesdindthedC
hapterdAppendix,dcalculatedthedfollowing.
a. Thedfuturedvaluedofd$450dsixdyearsdfromdnowdatd7dpercent.
b. Thedfuturedvaluedofd$900dsaveddeachdyeardford10dyearsdatd8dpercent.
c. Thedamountdadpersondwoulddhavedtoddepositdtodayd(presentdvalue)datdad6dpercentdinterestdratedtodh
aved$1,000dfivedyearsdfromdnow.
d. Thedamountdadpersondwoulddhavedtoddepositdtodaydtodbedabledtodtakedoutd$600dadyeardford10dyearsdfr
omdandaccountdearningd8dpercent.
Solution:d a.d$450d d 1.501d=d$675.45d
b.d$900d d 14.487d=d$13,038.30
c.d$1,000d d 0.747d=d$747
d.d$600d d 6.710d=d$4,026d
LO:d1-4
Topic:dComputingdthedTimedValuedofdMoneyd
LOD:dMedium
Bloomdtag:dApplication
7. CalculatingdthedFuturedValuedofdadSeriesdofdAmounts.dElainedRombergdpreparesdherdowndincomedtaxdret
urndeachdyear.dAdtaxdpreparerdwoulddchargedherd$70dfordthisdservice.dOverdadperioddofd10dyears,dhowdmuc
hddoesdElainedgaindfromdpreparingdherdowndtaxdreturn?dAssumedshedcandearnd3dpercentdondherdsavings.
Solution:d $70d d 11.464d=d$802.48d
LO:d1-4
Topic:dCalculatingdthedFuturedValuedofdadSeriesdofdAmountsd
LOD:d Difficult
Bloomdtag:dApplication
8. CalculatingdthedTimedValuedofdMoneydfordSavingsdGoals.dIfdyouddesiredtodhaved$20,000dfordaddowndpa
ymentdfordadhousedindfivedyears,dwhatdamountdwoulddyoudneeddtoddepositdtoday?dAssumedthatdyourdmo
neydwilldearnd4dpercent.
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittendconsentdo
fdMcGrawdHilldLLC.
mynursytest.store
, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
d d d d d d d d
Solution:d$20,000dxd0.822d(presentdvaluedofdsingledamount)d=d$16,440dL
O:d1-4
Topic:dCalculatingdthedTimedValuedofdMoneydfordSavingsdGoalsd
LOD:dIntermediate
Bloomdtag:dApplication
9. CalculatingdthedPresentdValuedofdadSeries.dPetedMortondisdplanningdtodgodtodgraduatedschooldindadprogramdo
fdstudydthatdwilldtakedthreedyears.dPetedwantsdtodhaved$15,000davailabledeachdyeardfordvariousdschooldanddliv
ingdexpenses.dIfdhedearnsd4dpercentdondhisdmoney,dhowdmuchdmustdbeddepositeddatdthedstartdofdhisdstudiesdtod
bedabledtodwithdrawd$15,000dadyeardfordthreedyears?
Solution:d $15,000dxd2.775d(presentdvaluedofdadseries)d=d$41,625d
LO:d1-4
Topic:dCalculatingdthedPresentdValuedofdadSeriesd
LOD:d Hard
Bloomdtag:dApplication
10. UsingdthedTimedValuedofdMoneydfordRetirementdPlanning.dCarladLopezddepositsd$3,400dadyeardintodherdr
etirementdaccount.dIfdthesedfundsdhavedandaveragedearningdofd9dpercentdoverdthed40dyearsduntildherdretire
ment,dwhatdwilldbedthedvaluedofdherdretirementdaccount?
Solution:d$3,400dxd337.890d(futuredvaluedofdadseries)d=d$1,284,826dLO:d
1-4
Topic:dUsingdthedTimedValuedofdMoneydfordRetirementdPlanningdLOD:d
Intermediate
Bloomdtag:dApplication
11. CalculatingdthedValuedofdReduceddSpending.dIfdadpersondspendsd$15dadweekdondcoffeed(assumed$750dady
ear),dwhatdwoulddbedthedfuturedvaluedofdthatdamountdoverd10dyearsdifdthedfundsdwereddepositeddindandacc
ountdearningd3dpercent?
Solution:d $750dxd11.464d(futuredvaluedofdadseries)d=d$8,598.d
LO:d1-4
Topic:dCalculatingdthedValuedofdReduceddSpendingd
LOD:dEasy
Bloomdtag:dApplication
12. CalculatingdthedPresentdValuedofdFuturedCashdFlows.dAdfinancialdcompanydadvertisesdondtelevisiondthatdt
heydwilldpaydyoud$60,000dnowdindexchangedfordannualdpaymentsdofd$10,000dthatdyoudaredexpecteddtodrece
ivedfordadlegaldsettlementdoverdthednextd10dyears.dIfdyoudestimatedthedtimedvaluedofdmoneydatd10dpercent,dw
oulddyoudacceptdthisdoffer?
Solution:d (1)dcalculatedthedfuturedvaluedofdthedannualdpayment $10,000dXd15.937d=d$159,370
(2) calculatedthedpresentdvaluedofdthatdfuturedflow: $159,370dXd0.386d=d$61,516.82
(3) thed$60,000dbeingdoffereddnowdisdlessdthandthedpresentdvaluedofdthedfuturedflow.
©dMcGrawdHilldLLC.dAlldrightsdreserved.dNodreproductiondorddistributiondwithoutdthedpriordwrittendconsentdo
fdMcGrawdHilldLLC.
mynursytest.store
