ACCESS Test Bank for Personal Finance 14th Edition Kapoor
t t t t t t t t
Kapoor, Personal Finance, 14e
t t t
Chaptert1tSolutions
1. CalculatingtthetFuturetValuetoftProperty.tJoshtCollinstplansttotbuytathousetfort$210,000.tIftthattrealtestate
tistexpectedttotincreasetintvaluetbyt3tpercentteacht year,twhattwilltitstapproximatetvaluetbetsix t yearstfromtn
ow?
Solution:t $210,000t t 1.194t=t$250,740tL
O:t1-2
Topic:tCalculatingtthetFuturetValuetoftPropertytL
OD:tIntermediate
Bloomttag:tApplication
2. UsingtthetRuletoft72.tUsingtthetruletoft72,tapproximatetthetfollowingtamounts.
a. Iftthetvaluetoftlandtintantareatistincreasingt6tpercenttatyear,thowtlongtwilltitttaketfortpropertytvaluest
totdouble?
b. Iftyoutearnt10tpercenttontyourtinvestments,thowtlongtwilltitttaketfortyourtmoneyttotdouble?
c. Attantannualtinteresttratetoft5tpercent,thowtlongtwilltitttaketfortyourtsavingsttotdouble?
Solution:
a. aboutt12tyearst(72/6)
b. aboutt7.2tyearst(72/10)
c. aboutt14.4tyearst(72/5)t
LO:t1-2
Topic:tUsingtthetRuletoft72tL
OD:tEasy
Bloomttag:tApplication
3. DeterminingtthetInflationtRate.tInt2018,tselectedtautomobilesthadtantaveragetcosttoft$16,000.tThetaver
agetcosttoftthosetsametautomobilestistnowt$24,000.tWhattwastthetratetoftincreasetfortthesetautomobiles
tbetweentthettwottimetperiods?
Solution:t($24,000t–
t$16,000)t/t$16,000t=t.50t(50tpercent)tLO:t1-2
Topic:tDeterminingtthetInflationtRatetL
OD:t Medium
Bloomttag:tApplication
4. ComputingtFuturetLivingtExpenses.tAtfamilytspendst$46,000tatyeartfortlivingtexpenses.tIftpricestincrease
tbyt2tpercenttat yeartfortthetnexttthreet years,twhattamounttwilltthetfamilytneedtforttheirtlivingtexpensestaftert
threetyears?
Solution:t $46,000t t 1.061t=t$48,806t(Futuretvaluetoftsingletamounttfort3tyearstatt2tpercent)tLO:t1
-2
Topic:tComputingtFuturetLivingtExpenses
©tMcGrawtHilltLLC.tAlltrightstreserved.tNotreproductiontortdistributiontwithouttthetpriortwrittentconsenttoftMc
GrawtHilltLLC.
mynursytest.store
, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
t t t t t t t t
LOD:t Easy
Bloomttag:tApplication
5. CalculatingtEarningstontSavings.tWhattwouldtbetthetyearlytearningstfortatpersontwitht$6,000tintsavi
ngstattantannualtinteresttratetoft2.5tpercent?
Solution:t $6,000t t .025t=t$150tL
O:t1-4
Topic:tCalculatingtEarningstontSavingstL
OD:tEasy
Bloomttag:tApplication
6. ComputingtthetTimetValuetoftMoney.tUsingtatfinancialtcalculatortorttimetvaluetoftmoneyttablestintthetChap
tertAppendix,tcalculatetthetfollowing.
a. Thetfuturetvaluetoft$450tsixtyearstfromtnowtatt7tpercent.
b. Thetfuturetvaluetoft$900tsavedteachtyeartfort10tyearstatt8tpercent.
c. Thetamounttatpersontwouldthavettotdepositttodayt(presenttvalue)tattat6tpercenttinteresttratettothavet
$1,000tfivetyearstfromtnow.
d. Thetamounttatpersontwouldthavettotdepositttodayttotbetablettottaketoutt$600tatyeartfort10tyearstfromta
ntaccounttearningt8tpercent.
Solution:t a.t$450t t 1.501t=t$675.45tb.t
$900t t 14.487t=t$13,038.30
c.t$1,000t t 0.747t=t$747
d.t$600t t 6.710t=t$4,026tL
O:t1-4
Topic:tComputingtthetTimetValuetoftMoneytL
OD:tMedium
Bloomttag:tApplication
7. CalculatingtthetFuturetValuetoftatSeriestoftAmounts.tElainetRombergtpreparesthertowntincomettaxtreturnt
eachtyear.tAttaxtpreparertwouldtchargethert$70tfortthistservice.tOvertatperiodtoft10tyears,thowtmuchtdoestE
lainetgaintfromtpreparingthertownttaxtreturn?tAssumetshetcantearnt3tpercenttonthertsavings.
Solution:t $70t t 11.464t=t$802.48tL
O:t1-4
Topic:tCalculatingtthetFuturetValuetoftatSeriestoftAmountstL
OD:t Difficult
Bloomttag:tApplication
8. CalculatingtthetTimetValuetoftMoneytfortSavingstGoals.tIftyoutdesirettothavet$20,000tfortatdowntpayme
nttfortathousetintfivetyears,twhattamounttwouldtyoutneedttotdepositttoday?tAssumetthattyourtmoneytwillte
arnt4tpercent.
©tMcGrawtHilltLLC.tAlltrightstreserved.tNotreproductiontortdistributiontwithouttthetpriortwrittentconsenttoftMc
GrawtHilltLLC.
mynursytest.store
, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
t t t t t t t t
Solution:t$20,000txt0.822t(presenttvaluetoftsingletamount)t=t$16,440tLO
:t1-4
Topic:tCalculatingtthetTimetValuetoftMoneytfortSavingstGoalstL
OD:tIntermediate
Bloomttag:tApplication
9. CalculatingtthetPresenttValuetoftatSeries.tPetetMortontistplanningttotgottotgraduatetschooltintatprogramtoftstu
dytthattwillttaketthreetyears.tPetetwantsttothavet$15,000tavailableteachtyeartfortvarioustschooltandtlivingtexpe
nses.tIfthetearnst4tpercenttonthistmoney,thowtmuchtmusttbetdepositedtattthetstarttofthiststudiesttotbetablettotwit
hdrawt$15,000tatyeartfortthreetyears?
Solution:t $15,000txt2.775t(presenttvaluetoftatseries)t=t$41,625tLO
:t1-4
Topic:tCalculatingtthetPresenttValuetoftatSeriestL
OD:t Hard
Bloomttag:tApplication
10. UsingtthetTimetValuetoftMoneytfortRetirementtPlanning.tCarlatLopeztdepositst$3,400tatyeartintothertretire
menttaccount.tIftthesetfundsthavetantaveragetearningtoft9tpercenttovertthet40tyearstuntilthertretirement,twh
attwilltbetthetvaluetofthertretirementtaccount?
Solution:t$3,400txt337.890t(futuretvaluetoftatseries)t=t$1,284,826tLO:t1-
4
Topic:tUsingtthetTimetValuetoftMoneytfortRetirementtPlanningtLOD:tIn
termediate
Bloomttag:tApplication
11. CalculatingtthetValuetoftReducedtSpending.tIftatpersontspendst$15tatweektontcoffeet(assumet$750tatyear),
twhattwouldtbetthetfuturetvaluetoftthattamounttovert10t yearstiftthetfundstweretdepositedtintantaccounttearni
ngt3tpercent?
Solution:t $750txt11.464t(futuretvaluetoftatseries)t=t$8,598.tLO
:t1-4
Topic:tCalculatingtthetValuetoftReducedtSpendingtL
OD:tEasy
Bloomttag:tApplication
12. CalculatingtthetPresenttValuetoftFuturetCashtFlows.tAtfinancialtcompanytadvertisestonttelevisiontthatttheyt
willtpaytyout$60,000tnowtintexchangetfortannualtpaymentstoft$10,000tthattyoutaretexpectedttotreceivetfortat
legaltsettlementtovertthetnextt10tyears.tIftyoutestimatetthettimetvaluetoftmoneytatt10tpercent,twouldtyoutacce
pttthistoffer?
Solution:t (1)tcalculatetthetfuturetvaluetoftthetannualtpayment $10,000tXt15.937t=t$159,370
(2) calculatetthetpresenttvaluetoftthattfuturetflow: $159,370tXt0.386t=t$61,516.82
(3) thet$60,000tbeingtofferedtnowtistlesstthantthetpresenttvaluetoftthetfuturetflow.
©tMcGrawtHilltLLC.tAlltrightstreserved.tNotreproductiontortdistributiontwithouttthetpriortwrittentconsenttoftMc
GrawtHilltLLC.
mynursytest.store
, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
t t t t t t t t
LO:t1-4
Topic:tCalculatingtthetPresenttValuetoftFuturetCashtFlowstL
OD:t Hard
Bloomttag:tApplication,tanalysis
13. CalculatingtthetPotentialtFuturetValuetoftSavings.tMaitTrantplansttotsettasidet$2,400tatyeartfortthetnexttsixtye
ars,tearningt4tpercent.tWhattwouldtbetthetfuturetvaluetoftthistsavingstamount?
Solution:t $2,400tXt6.633t=t(futuretvaluetoftatseries)t=t$15,919.20tLO:t1-
4
Topic:tCalculatingtthetPotentialtFuturetValuetoftSavingstL
OD:tEasy
Bloomttag:tApplication
14. DeterminingtatLoantPaymenttAmount.tIftyoutborrowt$8,000twithtat5tpercenttinteresttrate,ttotbetrepaidtintfiv
etequaltyearlytpayments,twhattwouldtbetthetamounttofteachtpayment?t(Note:tUsetatfinancialtcalculatortortth
etpresenttvaluetoftantannuityttabletintthetChaptertAppendix.)
Solution:t$8,000t/t4.329t=t$1,848tLO:t
1-4
Topic:tDeterminingtatLoantPaymenttAmounttL
OD:t Hard
Bloomttag:tApplication
©tMcGrawtHilltLLC.tAlltrightstreserved.tNotreproductiontortdistributiontwithouttthetpriortwrittentconsenttoftMc
GrawtHilltLLC.
mynursytest.store
t t t t t t t t
Kapoor, Personal Finance, 14e
t t t
Chaptert1tSolutions
1. CalculatingtthetFuturetValuetoftProperty.tJoshtCollinstplansttotbuytathousetfort$210,000.tIftthattrealtestate
tistexpectedttotincreasetintvaluetbyt3tpercentteacht year,twhattwilltitstapproximatetvaluetbetsix t yearstfromtn
ow?
Solution:t $210,000t t 1.194t=t$250,740tL
O:t1-2
Topic:tCalculatingtthetFuturetValuetoftPropertytL
OD:tIntermediate
Bloomttag:tApplication
2. UsingtthetRuletoft72.tUsingtthetruletoft72,tapproximatetthetfollowingtamounts.
a. Iftthetvaluetoftlandtintantareatistincreasingt6tpercenttatyear,thowtlongtwilltitttaketfortpropertytvaluest
totdouble?
b. Iftyoutearnt10tpercenttontyourtinvestments,thowtlongtwilltitttaketfortyourtmoneyttotdouble?
c. Attantannualtinteresttratetoft5tpercent,thowtlongtwilltitttaketfortyourtsavingsttotdouble?
Solution:
a. aboutt12tyearst(72/6)
b. aboutt7.2tyearst(72/10)
c. aboutt14.4tyearst(72/5)t
LO:t1-2
Topic:tUsingtthetRuletoft72tL
OD:tEasy
Bloomttag:tApplication
3. DeterminingtthetInflationtRate.tInt2018,tselectedtautomobilesthadtantaveragetcosttoft$16,000.tThetaver
agetcosttoftthosetsametautomobilestistnowt$24,000.tWhattwastthetratetoftincreasetfortthesetautomobiles
tbetweentthettwottimetperiods?
Solution:t($24,000t–
t$16,000)t/t$16,000t=t.50t(50tpercent)tLO:t1-2
Topic:tDeterminingtthetInflationtRatetL
OD:t Medium
Bloomttag:tApplication
4. ComputingtFuturetLivingtExpenses.tAtfamilytspendst$46,000tatyeartfortlivingtexpenses.tIftpricestincrease
tbyt2tpercenttat yeartfortthetnexttthreet years,twhattamounttwilltthetfamilytneedtforttheirtlivingtexpensestaftert
threetyears?
Solution:t $46,000t t 1.061t=t$48,806t(Futuretvaluetoftsingletamounttfort3tyearstatt2tpercent)tLO:t1
-2
Topic:tComputingtFuturetLivingtExpenses
©tMcGrawtHilltLLC.tAlltrightstreserved.tNotreproductiontortdistributiontwithouttthetpriortwrittentconsenttoftMc
GrawtHilltLLC.
mynursytest.store
, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
t t t t t t t t
LOD:t Easy
Bloomttag:tApplication
5. CalculatingtEarningstontSavings.tWhattwouldtbetthetyearlytearningstfortatpersontwitht$6,000tintsavi
ngstattantannualtinteresttratetoft2.5tpercent?
Solution:t $6,000t t .025t=t$150tL
O:t1-4
Topic:tCalculatingtEarningstontSavingstL
OD:tEasy
Bloomttag:tApplication
6. ComputingtthetTimetValuetoftMoney.tUsingtatfinancialtcalculatortorttimetvaluetoftmoneyttablestintthetChap
tertAppendix,tcalculatetthetfollowing.
a. Thetfuturetvaluetoft$450tsixtyearstfromtnowtatt7tpercent.
b. Thetfuturetvaluetoft$900tsavedteachtyeartfort10tyearstatt8tpercent.
c. Thetamounttatpersontwouldthavettotdepositttodayt(presenttvalue)tattat6tpercenttinteresttratettothavet
$1,000tfivetyearstfromtnow.
d. Thetamounttatpersontwouldthavettotdepositttodayttotbetablettottaketoutt$600tatyeartfort10tyearstfromta
ntaccounttearningt8tpercent.
Solution:t a.t$450t t 1.501t=t$675.45tb.t
$900t t 14.487t=t$13,038.30
c.t$1,000t t 0.747t=t$747
d.t$600t t 6.710t=t$4,026tL
O:t1-4
Topic:tComputingtthetTimetValuetoftMoneytL
OD:tMedium
Bloomttag:tApplication
7. CalculatingtthetFuturetValuetoftatSeriestoftAmounts.tElainetRombergtpreparesthertowntincomettaxtreturnt
eachtyear.tAttaxtpreparertwouldtchargethert$70tfortthistservice.tOvertatperiodtoft10tyears,thowtmuchtdoestE
lainetgaintfromtpreparingthertownttaxtreturn?tAssumetshetcantearnt3tpercenttonthertsavings.
Solution:t $70t t 11.464t=t$802.48tL
O:t1-4
Topic:tCalculatingtthetFuturetValuetoftatSeriestoftAmountstL
OD:t Difficult
Bloomttag:tApplication
8. CalculatingtthetTimetValuetoftMoneytfortSavingstGoals.tIftyoutdesirettothavet$20,000tfortatdowntpayme
nttfortathousetintfivetyears,twhattamounttwouldtyoutneedttotdepositttoday?tAssumetthattyourtmoneytwillte
arnt4tpercent.
©tMcGrawtHilltLLC.tAlltrightstreserved.tNotreproductiontortdistributiontwithouttthetpriortwrittentconsenttoftMc
GrawtHilltLLC.
mynursytest.store
, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
t t t t t t t t
Solution:t$20,000txt0.822t(presenttvaluetoftsingletamount)t=t$16,440tLO
:t1-4
Topic:tCalculatingtthetTimetValuetoftMoneytfortSavingstGoalstL
OD:tIntermediate
Bloomttag:tApplication
9. CalculatingtthetPresenttValuetoftatSeries.tPetetMortontistplanningttotgottotgraduatetschooltintatprogramtoftstu
dytthattwillttaketthreetyears.tPetetwantsttothavet$15,000tavailableteachtyeartfortvarioustschooltandtlivingtexpe
nses.tIfthetearnst4tpercenttonthistmoney,thowtmuchtmusttbetdepositedtattthetstarttofthiststudiesttotbetablettotwit
hdrawt$15,000tatyeartfortthreetyears?
Solution:t $15,000txt2.775t(presenttvaluetoftatseries)t=t$41,625tLO
:t1-4
Topic:tCalculatingtthetPresenttValuetoftatSeriestL
OD:t Hard
Bloomttag:tApplication
10. UsingtthetTimetValuetoftMoneytfortRetirementtPlanning.tCarlatLopeztdepositst$3,400tatyeartintothertretire
menttaccount.tIftthesetfundsthavetantaveragetearningtoft9tpercenttovertthet40tyearstuntilthertretirement,twh
attwilltbetthetvaluetofthertretirementtaccount?
Solution:t$3,400txt337.890t(futuretvaluetoftatseries)t=t$1,284,826tLO:t1-
4
Topic:tUsingtthetTimetValuetoftMoneytfortRetirementtPlanningtLOD:tIn
termediate
Bloomttag:tApplication
11. CalculatingtthetValuetoftReducedtSpending.tIftatpersontspendst$15tatweektontcoffeet(assumet$750tatyear),
twhattwouldtbetthetfuturetvaluetoftthattamounttovert10t yearstiftthetfundstweretdepositedtintantaccounttearni
ngt3tpercent?
Solution:t $750txt11.464t(futuretvaluetoftatseries)t=t$8,598.tLO
:t1-4
Topic:tCalculatingtthetValuetoftReducedtSpendingtL
OD:tEasy
Bloomttag:tApplication
12. CalculatingtthetPresenttValuetoftFuturetCashtFlows.tAtfinancialtcompanytadvertisestonttelevisiontthatttheyt
willtpaytyout$60,000tnowtintexchangetfortannualtpaymentstoft$10,000tthattyoutaretexpectedttotreceivetfortat
legaltsettlementtovertthetnextt10tyears.tIftyoutestimatetthettimetvaluetoftmoneytatt10tpercent,twouldtyoutacce
pttthistoffer?
Solution:t (1)tcalculatetthetfuturetvaluetoftthetannualtpayment $10,000tXt15.937t=t$159,370
(2) calculatetthetpresenttvaluetoftthattfuturetflow: $159,370tXt0.386t=t$61,516.82
(3) thet$60,000tbeingtofferedtnowtistlesstthantthetpresenttvaluetoftthetfuturetflow.
©tMcGrawtHilltLLC.tAlltrightstreserved.tNotreproductiontortdistributiontwithouttthetpriortwrittentconsenttoftMc
GrawtHilltLLC.
mynursytest.store
, ACCESS Test Bank for Personal Finance 14th Edition Kapoor
t t t t t t t t
LO:t1-4
Topic:tCalculatingtthetPresenttValuetoftFuturetCashtFlowstL
OD:t Hard
Bloomttag:tApplication,tanalysis
13. CalculatingtthetPotentialtFuturetValuetoftSavings.tMaitTrantplansttotsettasidet$2,400tatyeartfortthetnexttsixtye
ars,tearningt4tpercent.tWhattwouldtbetthetfuturetvaluetoftthistsavingstamount?
Solution:t $2,400tXt6.633t=t(futuretvaluetoftatseries)t=t$15,919.20tLO:t1-
4
Topic:tCalculatingtthetPotentialtFuturetValuetoftSavingstL
OD:tEasy
Bloomttag:tApplication
14. DeterminingtatLoantPaymenttAmount.tIftyoutborrowt$8,000twithtat5tpercenttinteresttrate,ttotbetrepaidtintfiv
etequaltyearlytpayments,twhattwouldtbetthetamounttofteachtpayment?t(Note:tUsetatfinancialtcalculatortortth
etpresenttvaluetoftantannuityttabletintthetChaptertAppendix.)
Solution:t$8,000t/t4.329t=t$1,848tLO:t
1-4
Topic:tDeterminingtatLoantPaymenttAmounttL
OD:t Hard
Bloomttag:tApplication
©tMcGrawtHilltLLC.tAlltrightstreserved.tNotreproductiontortdistributiontwithouttthetpriortwrittentconsenttoftMc
GrawtHilltLLC.
mynursytest.store
