Questions and Answers of Focus On Personal Finance

Suppose that yours is a typical family. Your annual income is $55,000. Use the easy method to determine your need for life insurance.
Using Exhibit 12-2, determine the average number of additional years males alive at age 35 may expect to live. Exhibit 12-2 Life expectancy tables, all races, 2018 This table helps insurance
Most of us know someone who contracted COVID-19 and recovered.Some of us may know someone who did not fare as well and may still have long-term symptoms or even passed away due to the virus.During
Using the “nonworking” spouse method, what should be the life insurance needs for the nonworking spouse in a family whose youngest child is 3 years old?
Using Exhibit 12-2, determine the life expectancy of a 60-year-old female. Exhibit 12-2 Life expectancy tables, all races, 2018 This table helps insurance companies determine insurance premiums. Use
Jeff and Ann are both 28 years old. They have been married for three years, and they have a son who is almost 2. They expect their second child in a few months.Jeff is a junior software developer. He
Suppose your annual premium for a $20,000, 20-year limitedpayment policy is $450 over the 20-year period. The cash value of your policy at the end of 20 years is $8,500. Assume that you could have
You have a gross annual income of $65,000. Use the multiple of income method to determine the maximum amount of life insurance you should carry.
You are the wage earner in a “typical family,” with $70,000 gross annual income. Use the easy method to determine how much life insurance you should carry.
Suppose that yours is a typical family.Your annual income is $65,000. Using the easy method, what should be your need for life insurance?
Using the “nonworking” spouse method, what should be the life insurance needs for a nonworking spouse whose youngest child is 8 years old?
Your variable annuity charges administrative fees at an annual rate of 0.215 percent of account value. Your average account value during the year is $60,000. What is the administrative fee for the
For Alicia Thompson, the last few years have been a financial nightmare. It all started when she lost her job. Because she had no income and no emergency fund, she began using her credit cards to
A personal financial advisor provides advice to help individuals manage their finances and plan their financial future. According to the U.S. Bureau of Labor Statistics, the need for financial
John and Nina Hartwick, married 17 years, have a 13-year-old daughter. Eight years ago, they purchased a home on which they owe about $240,000. They also owe $6,000 on a two-year-old automobile. All
Matt Jackson paid $1,000 for a corporate bond issued by Chevron Corporation.The annual interest rate for the bond is 2.36 percent.1. What is the annual interest amount for the Chevron bond?2. Since
Assume that at the beginning of the year, you purchase an investment for $5,600 that pays $125 annual income. Also assume the investment’s value has increased to $5,900 by the end of the year.1.
Assume that at the beginning of the year, you purchase an investment for $8,200 that pays $80 annual income.Also assume that the investment’s value has increased to $9,000 at the end of the year.1.
Assume that at the beginning of the year, you purchase an investment for $5,100 that pays $100 annual income. Also assume the investment’s value has decreased to $4,700 by the end of the year.1.
Assume that you purchased a $1,000 corporate bond. The interest rate is 3.70 percent. What is the dollar amount of annual interest you will receive each year?
Three years ago you purchased a $1,000 Kroger corporate bond that pays 3.95 percent annual interest. What is the total dollar amount of interest that you received from your bond investment over the
Jackie Martin purchased five $1,000 corporate bonds issued by Starbucks. The bonds pay 2.45 percent annual interest and mature in 2026. What is the total dollar amount of interest Jackie will receive
Bond Investment. Assume that three years ago, you purchased a $1.000 corporate bond that pays 3.85 percent. Also assume that three years after your bond investment, comparable bonds are paying 4.50
If Ronald selects the POS plan, what will his annual medical costs be?Ronald Roth started his new job as controller with Aerosystems today. Carole, the employee benefits clerk, gave Ronald a packet
What annual medical costs will Ronald pay using the sample medical expenses provided if he enrolls in the Blue Cross/Blue Shield plan?Ronald Roth started his new job as controller with Aerosystems
Karen and Mike currently insure their cars with separate companies, paying $700 and $900 a year. If they insured both cars with the same company, they would save 10 percent on the annual premiums.
If a person saves $62 a month by using coupons and doing comparison shopping,(a) what is the amount for a year? (b) What would be the future value of this annual amount over 10 years, assuming
In 2007, Joelle spent $5,000 on her health care. If this amount increased by 6 percent per year, what would be the amount Joelle spent in 2017 for the same health care?
In 2012, per capita spending on health care in the United States was about $9,000. If this amount increased by 7 percent a year, what would be the amount of per capita spending for health care in
Sarah and James Hernandez purchased 160 shares of Macy’s stock at $20 a share. One year later, they sold the stock for $24 a share. They paid a broker a commission of $8 when they purchased the
Jason Mathews purchased 300 shares of the Hodge & Mattox Energy Fund. Each share cost $15.15. Fifteen months later, he decided to sell his shares when the share value reached $18.10.a. What was
Using Exhibit 14–3, calculate approximately how much money the household from Problem 4 spends on health care. Pretax Annual Income Annual Expenditures Housing Food Clothing Transportation Health
In 2020, you gave a gift of $15,000 to a friend. What was the gift tax?
How much money can they gift to their children in 2020 without any gift tax liability?Barry and Mary have accumulated over $3.5 million during their 50 years of marriage. They have three children and
How much money can Barry and Mary gift to their grandchildren in 2020 without any gift tax liability?Barry and Mary have accumulated over $3.5 million during their 50 years of marriage. They have
What is the total amount of estate removed from Barry and Mary’s estate in 2020?Barry and Mary have accumulated over $3.5 million during their 50 years of marriage. They have three children and
Joe and Rachael are both retired. Married for 55 years, they have amassed an estate worth $4.4 million. The couple has no trust or other type of tax-sheltered assets. If Joe or Rachael died in 2020,
A family spends $46,000 a year for living expenses. If prices increase 3 percent a year for the next three years, what amount will the family need for their living expenses after three years?
Ben Collins plans to buy a house for $260,000. If the real estate in his area is expected to increase in value 2 percent each year, what will its approximate value be seven years from now?
In Problem 5, Joshua borrowed $1,000 on January 1, 2021, and paid it all back at once on December 31, 2021. What was the APR?
A service contract for a video projection system costs $80 a year. You expect to use the system for six years. Instead of buying the service contract, what would be the future value of these annual
Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation (see Exhibit 7–6). Step 1: Determine your
Many locations require that renters be paid interest on their security deposits. If you have a security deposit of $1,800, how much interest would you expect to earn per year at 2 percent?
Based on Exhibit 7–7, or use of a financial calculator, what would be the monthly mortgage payments for each of the following situations?a. A $160,000,15-year loan at 4.5 percent.b. A $215,000,
Jane and Bill Collins have total take-home pay of $5,400 a month. Their monthly expenses total $4,250. Calculate the minimum amount this couple needs to establish an emergency fund.
Determine the current yield on a corporate bond investment that has a face value of $1,000, pays 4.45 percent, and has a current price of $920.
Jamie and Peter Dawson own 180 shares of Duke Energy common stock. Duke Energy’s quarterly dividend is $0.95 per share. What is the amount of the dividend check the Dawson couple will receive for
During the four quarters for 2020, the Browns received two quarterly dividend payments of $0.32, one quarterly payment of $0.40, and one quarterly payment of $0.52. If they owned 270 shares of stock,
Jim Johansen noticed that a corporation he is considering investing in is about to pay a quarterly dividend. The record date is Thursday, April 23, 2020. In order for Jim to receive this quarterly
Wanda Sotheby purchased 120 shares of Home Depot stock at $235 a share. One year later, she sold the stock for $218 a share. She paid her broker a commission of $34 when she purchased the stock and a
In September, the board of directors of Chaparral Steel approved a stock split of 2-for-1. After the split, how many shares of Chaparral Steel stock will an investor have if he or she owned 230
Analysts who follow JPMorgan Chase, one of the nation’s largest providers of financial services, estimate that the corporation’s earnings per share will increase from $10.87 in the current year
Currently, 3M Company pays an annual dividend of $5.88. If the stock is selling for $160, what is the dividend yield?
General Motors has a beta of 1.34. If the overall stock market increases by 6 percent, based on this information, how much should investors assume that General Motors will increase?
For four years, Marty Campbell invested $4,000 each year in Harley-Davidson. The stock was selling for $55 in 2017, $47 in 2018, $36 in 2019, and $33 in 2020.a. What is Marty’s total investment in
Bob Orleans invested $3,000 and borrowed $3,000 to purchase shares in Verizon Communications. At the time of his investment, Verizon was selling for $60 a share.a. If Bob paid a commission of $20,
After researching Valero Energy common stock, Sandra Pearson is convinced the stock is overpriced. She contacts her account executive and arranges to sell short 250 shares of Valero Energy. At the
The Western Capital Growth mutual fund has:Total assets, $836,000,000Total liabilities, $6,000,000Total number of shares, 40,000,000What is the fund’s net asset value (NAV)?
Jan Throng invested $61,000 in the Invesco Charter mutual fund. The fund charges a commission of 5.50 percent when shares are purchased. Calculate the amount of commission Jan must pay.
As Bart Brownlee approached retirement, he decided the time had come to invest some of his nest egg in a conservative fund. He chose the Franklin Utilities Fund. If he invests $25,000 and the fund
Mary Canfield purchased shares in the New Dimensions Global Growth Fund. This fund doesn’t charge a front-end load, but it does charge a contingent deferred sales load of 4 percent for any
The value of Mike Jackson’s shares in the New Frontiers Technology Fund is $63,200. The management fee for this particular fund is 0.60 percent of the total asset value. Calculate the management
Betty and James Holloway invested $71,000 in the Financial Vision Social Responsibility Fund. The management fee for this fund is 0.80 percent of the total asset value. Calculate the management fee
As part of his 401(k) retirement plan at work, Ken Lowery invests 5 percent of his salary each month in the Capital Investments Lifecycle Fund. At the end of this year, Ken’s 401(k) account has a
When Jill Thompson received a large settlement from an automobile accident, she chose to invest $140,000 in the Vanguard 500 Index Fund. This fund has an expense ratio of 0.14 percent. What is the
The Yamaha Aggressive Growth Fund has an expense ratio of 1.83 percent.a. If you invest $64,000 in this fund, what is the dollar amount of fees that you would pay this year?b. Based on the
Three years ago, James Matheson bought 200 shares of a mutual fund for $29 a share. During the three-year period, he received total income dividends of $1.90 per share. He also received total capital
Assume that one year ago, you bought 120 shares of a mutual fund for $31 a share, you received a capital gain distribution of $0.82 per share during the past 12 months, and the market value of the
Over a four-year period, LaKeisha Thompson purchased shares in the Oak mark Investor Class Fund. Using the information below, answer the questions that follow. You may want to review the concept of
During one three-month period, Matt Roundtop’s mutual fund grew by $4,000. If he withdraws 35 percent of the growth, how much will he receive?
Shelly’s assets include money in checking and saving accounts, investments in stocks and mutual funds, and personal property such as furniture, appliances, an automobile, a coin collection, and
Ted Riley owns a Lexus worth $40,000. He owns a home worth $275,000. He has a checking account with $800 in it and a savings account with $1,900 in it. He has a mutual fund worth $110,000. His
Calculate approximately how much money an older (age 65-74) household with an annual income of $45,000 spends on housing each year.
Gene and Dixie, husband and wife (ages 35 and 32), both work. They have an adjusted gross income of $95,000 in 2020, and they are filing a joint income tax return. Both have employer-provided
What was the gift tax in 2019?In 2019, Joshua gave $15,000 worth of Microsoft stock to his son. In 2020, the Microsoft shares were worth $23,000.
What was the total amount removed from Joshua’s estate in 2020?In 2019, Joshua gave $15,000 worth of Microsoft stock to his son. In 2020, the Microsoft shares were worth $23,000.
What was the gift tax in 2020?In 2019, Joshua gave $15,000 worth of Microsoft stock to his son. In 2020, the Microsoft shares were worth $23,000.
Assume you own a corporate bond that has a face value of $1,000 and pays 4.60 percent. What is the current yield if the bond is currently selling for $1,080?
If $4,323 were withheld during the year and taxes owed were $4,122, would the person owe an additional amount or receive a refund?
A payday loan company charges 6 percent interest for a two-week period. What would be the annual interest rate from that company?
A certificate of deposit often charges a penalty for withdrawing funds before the maturity date. If the penalty involves two months of interest, what would be the amount for early withdrawal on a
A few years ago, Simon Powell purchased a home for $220,000. Today, the home is Problems worth $300,000. His remaining mortgage balance is $100,000. Assuming that Simon can borrow up to 80 percent of
Louise McIntyre’s monthly gross income is $4,000. Her employer withholds $800 in federal, state, and local income taxes and $320 in Social Security taxes per month. Louise contributes $160 each
Joshua borrowed $1,000 for one year and paid $100 in interest. The bank charged him a $10 service charge. What is the finance charge on this loan?
If Joshua paid the $1,000 in 12 equal monthly payments in problem 5, what is the APR?
Sidney took a $200 cash advance by using checks linked to her credit card account. The bank charges a 2 percent cash advance fee on the amount borrowed and offers no grace period on cash advances.
Brooke lacks cash to pay for a $600 washing machine. She could buy it from the store on credit by making 12 monthly payments of $52.74 each. The total cost would then be $632.88. Instead, Brooke
After visiting several automobile dealerships, Richard selects the car he wants. He likes its $10,000 price, but financing through the dealer is no bargain. He has $2,000 cash for a down payment, so
Which mortgage would result in higher total payments?a. Mortgage A: $985 a month for 30 years.b. Mortgage B: $780 a month for 5 years and $1,056 a month for 25 years.
Most home insurance policies cover jewelry for $2,000 and silverware for $5,000 unless items are covered with additional insurance. If $9,000 worth of jewelry and $12,000 worth of silverware were
What amount would a person with actual cash value coverage receive for two-year old furniture destroyed by a fire? The furniture would cost $2,000 to replace today and had an estimated life of five
What would it cost an insurance company to replace a family’s personal property that originally cost $40,000? The replacement costs for the items have increased 15 percent.
If Carissa Dalton has a $260,000 home insured for $200,000, based on the 80 percent coinsurance provision, how much would the insurance company pay on a claim of $10,000? Assume there is no
When Carolina’s house burned down, she lost household items worth a total of $50,000. Her house was insured for $160,000, and her homeowner’s policy provided coverage for personal belongings up
In the preceding example, assuming their insurance rates remain the same, how many years will it take Dave and Ellen to earn back in discounts the cost of the dead-bolts? The cost of the smoke
Shaan and Anita currently insure their cars with separate companies, paying $650 and $575 a year. If they insure both cars with the same company, they would save 10 percent on their annual premiums.
The Tucker family has health insurance coverage that pays 80 percent of out-of-hospital expenses after a deductible of $1,000 per person. If one family member has doctor and prescription medication
Georgia, a widow, has take-home pay of $1,200 a week. Her disability insurance coverage replaces 70 percent of her earnings after a four-week waiting period. What amount would she receive in
Stephanie was injured in a car accident and was rushed to the emergency room. She received stitches for a facial wound and treatment for a broken finger. Under Stephanie’s PPO plan, emergency room
Use Exhibit 10–1 to find the average number of additional years a male and female, age 25, are expected to live based on the statistics gathered by the U.S. government as of 2017. Age 0 1 SE 4 3 5

Showing 200 - 300 of 337