CRPC FINAL EXAM 2025 NEWEST EXAM FORM A AND B
COMPLETE 100 QUESTIONS WITH DETAILED VERIFIED
ANSWERS (100% CORRECT ANSWERS) /ALREADY GRADED A+
Question 1
Richard wants to have an annual retirement income of $100,000 (payable at the beginning of
each year) protected against 3% inflation. Assuming a 7% after-tax rate of return and a
retirement period of 30 years, how much money does Richard need in order to meet his goal?
Explain how you need to input this on the calculator and why.
A) Step One - Set the calculator to END. Step Two - Calculate the inflation adjusted rate of
return (Rate of Return minus Inflation Rate). Put this number in the I/YR. Step Three - 100,000
goes in as a PMT. Step Four - 30 goes in as N. Step Five - Press PV.
B) Step One - Set the calculator to BEGIN. Step Two - Calculate the inflation adjusted rate of
return ((1 + Rate of Return) / (1 + Inflation Rate)) - 1 * 100. Put this number in the I/YR. Step
Three - 100,000 goes in as a PMT. Step Four - 30 goes in as N. Step Five - Press PV. Richard
needs $1,822,042.88 in today's dollars to meet his needs.
C) Step One - Set the calculator to BEGIN. Step Two - Use the nominal rate of return (7%) for
I/YR. Step Three - 100,000 goes in as a PMT. Step Four - 30 goes in as N. Step Five - Press PV.
D) Step One - Set the calculator to END. Step Two - Use the nominal rate of return (7%) for
I/YR. Step Three - 100,000 goes in as a PMT. Step Four - 30 goes in as N. Step Five - Press PV.
E) Step One - Set the calculator to BEGIN. Step Two - Calculate the inflation adjusted rate of
return (Rate of Return + Inflation Rate). Put this number in the I/YR. Step Three - 100,000 goes
in as a PMT. Step Four - 30 goes in as N. Step Five - Press FV.
Correct Answer: B) Step One - Set the calculator to BEGIN. Step Two - Calculate
the inflation adjusted rate of return (One plus the Rate of Return divided by One
plus the interest rate, minus one, multiplied by 100 = the inflation adjusted rate of
,return) Put this number in the I/YR Step Three - 100,000 goes in as a PMT Step
Four - 30 goes in as N Step Five -Press PV Richard needs $1,822,042.88 in today's
dollars to meet his needs.
Rationale: Payments made at the beginning of the period require the calculator to
be in BEGIN mode. The inflation-adjusted rate of return (real rate of return) must
be used to account for inflation eroding purchasing power. The formula is ( (1 +
Nominal Rate) / (1 + Inflation Rate) ) - 1. Then, solve for Present Value (PV) using
the future payment stream and retirement period.
Question 2
How do you calculate the inflation-adjusted rate of return?
A) Rate of Return + Inflation Rate
B) Rate of Return - Inflation Rate
C) (1 + Rate of Return) / (1 + Inflation Rate) - 1
D) (Rate of Return - Inflation Rate) / (1 + Inflation Rate)
E) Rate of Return * (1 - Inflation Rate)
Correct Answer: C) 1 plus the Rate of Return Divided by 1 plus the interest rate
minus one multiplied by 100
Rationale: This formula (often called the Fisher equation approximation for real
rate) correctly isolates the return component that accounts for the erosion of
purchasing power due to inflation.
Question 3
Tom has been promised a stream of $40,000 annual payments at the end of each year for 25
years. The present value of these payments discounted at a rate of 5% is which one of the
, following amounts?
A) $563,758
B) $400,000
C) $735,375
D) $600,000
E)
800,000𝐶𝑜𝑟𝑟𝑒𝑐𝑡𝐴𝑛𝑠𝑤𝑒𝑟: 𝐴) ∗∗
563,758**
Rationale: This is a standard present value of an annuity calculation. Set calculator to
END mode (payments at end of period). PMT = 40,000, N = 25, I/YR = 5, then solve
for PV.
Question 4
Nick wants to maintain the purchasing power of $75,000 (in today's dollars) in retirement. If
inflation continues to average 3.5%, approximately what amount will Nick need in 20 years to
equal the purchasing power of $75,000 today? (Round your answer.)
A) $75,000
B) $105,000
C) $149,234
D) $150,000
E)
130,000𝐶𝑜𝑟𝑟𝑒𝑐𝑡𝐴𝑛𝑠𝑤𝑒𝑟: 𝐷) ∗∗
COMPLETE 100 QUESTIONS WITH DETAILED VERIFIED
ANSWERS (100% CORRECT ANSWERS) /ALREADY GRADED A+
Question 1
Richard wants to have an annual retirement income of $100,000 (payable at the beginning of
each year) protected against 3% inflation. Assuming a 7% after-tax rate of return and a
retirement period of 30 years, how much money does Richard need in order to meet his goal?
Explain how you need to input this on the calculator and why.
A) Step One - Set the calculator to END. Step Two - Calculate the inflation adjusted rate of
return (Rate of Return minus Inflation Rate). Put this number in the I/YR. Step Three - 100,000
goes in as a PMT. Step Four - 30 goes in as N. Step Five - Press PV.
B) Step One - Set the calculator to BEGIN. Step Two - Calculate the inflation adjusted rate of
return ((1 + Rate of Return) / (1 + Inflation Rate)) - 1 * 100. Put this number in the I/YR. Step
Three - 100,000 goes in as a PMT. Step Four - 30 goes in as N. Step Five - Press PV. Richard
needs $1,822,042.88 in today's dollars to meet his needs.
C) Step One - Set the calculator to BEGIN. Step Two - Use the nominal rate of return (7%) for
I/YR. Step Three - 100,000 goes in as a PMT. Step Four - 30 goes in as N. Step Five - Press PV.
D) Step One - Set the calculator to END. Step Two - Use the nominal rate of return (7%) for
I/YR. Step Three - 100,000 goes in as a PMT. Step Four - 30 goes in as N. Step Five - Press PV.
E) Step One - Set the calculator to BEGIN. Step Two - Calculate the inflation adjusted rate of
return (Rate of Return + Inflation Rate). Put this number in the I/YR. Step Three - 100,000 goes
in as a PMT. Step Four - 30 goes in as N. Step Five - Press FV.
Correct Answer: B) Step One - Set the calculator to BEGIN. Step Two - Calculate
the inflation adjusted rate of return (One plus the Rate of Return divided by One
plus the interest rate, minus one, multiplied by 100 = the inflation adjusted rate of
,return) Put this number in the I/YR Step Three - 100,000 goes in as a PMT Step
Four - 30 goes in as N Step Five -Press PV Richard needs $1,822,042.88 in today's
dollars to meet his needs.
Rationale: Payments made at the beginning of the period require the calculator to
be in BEGIN mode. The inflation-adjusted rate of return (real rate of return) must
be used to account for inflation eroding purchasing power. The formula is ( (1 +
Nominal Rate) / (1 + Inflation Rate) ) - 1. Then, solve for Present Value (PV) using
the future payment stream and retirement period.
Question 2
How do you calculate the inflation-adjusted rate of return?
A) Rate of Return + Inflation Rate
B) Rate of Return - Inflation Rate
C) (1 + Rate of Return) / (1 + Inflation Rate) - 1
D) (Rate of Return - Inflation Rate) / (1 + Inflation Rate)
E) Rate of Return * (1 - Inflation Rate)
Correct Answer: C) 1 plus the Rate of Return Divided by 1 plus the interest rate
minus one multiplied by 100
Rationale: This formula (often called the Fisher equation approximation for real
rate) correctly isolates the return component that accounts for the erosion of
purchasing power due to inflation.
Question 3
Tom has been promised a stream of $40,000 annual payments at the end of each year for 25
years. The present value of these payments discounted at a rate of 5% is which one of the
, following amounts?
A) $563,758
B) $400,000
C) $735,375
D) $600,000
E)
800,000𝐶𝑜𝑟𝑟𝑒𝑐𝑡𝐴𝑛𝑠𝑤𝑒𝑟: 𝐴) ∗∗
563,758**
Rationale: This is a standard present value of an annuity calculation. Set calculator to
END mode (payments at end of period). PMT = 40,000, N = 25, I/YR = 5, then solve
for PV.
Question 4
Nick wants to maintain the purchasing power of $75,000 (in today's dollars) in retirement. If
inflation continues to average 3.5%, approximately what amount will Nick need in 20 years to
equal the purchasing power of $75,000 today? (Round your answer.)
A) $75,000
B) $105,000
C) $149,234
D) $150,000
E)
130,000𝐶𝑜𝑟𝑟𝑒𝑐𝑡𝐴𝑛𝑠𝑤𝑒𝑟: 𝐷) ∗∗
