This is the book link
Chapter one Learning goals excises
1. How can using personal financial planning tools help you improve your financial situation?
Describe changes you can make in at least three areas.
2. Use Worksheet 1.1. Fill out Worksheet 1.1, “Summary of Personal Financial Goals,” with
goals reflecting your current situation and your expected life situation in 5 and 10 years.
Discuss the reasons for the changes in your goals and how you’ll need to adapt your financial plans as a result.
3. Recommend three financial goals and related activities for someone in each of the following circumstances:
a. Senior in college
b. 32-year-old computer programmer who plans to earn an MBA degree
c. Couple in their 30s with two children, ages 5 and 9
d. Divorced 42-year-old man with a 15-year-old child and a 80-year-old father who is ill
4. Explain the life cycle of financial plans and their role in achieving your financial goals.
5. Summarize current and projected trends in the economy with regard to GDP growth,
unemployment, and inflation. How should you use this information to make personal
financial and career planning decisions?
6. Evaluate the impact of age, education, and geographic location on personal income.
7. Assume that you graduated from college with a major in finance and took a job with a
large bank. After 3 years, you are laid off when the company downsizes. Describe the
steps you’d take to “repackage” yourself for another field.
1. Tim Roberts is preparing his balance sheet and income and expense statement for the
year ending June 30, 2012. He is having difficulty classifying six items and asks for your
help. Which, if any, of the following transactions are assets, liabilities, income, or expense
a. Tim rents a house for $925 a month.
b. On June 21, 2012, Tim bought diamond earrings for his wife and charged them using his
Visa card. The earrings cost $700, but he hasn’t yet received the bill.
c. Tim borrowed $2,500 from his parents last fall, but so far he has made no payments
d. Tim makes monthly payments of $120 on an installment loan; about half of it is interest,
and the balance is repayment of principal. He has 20 payments left, totaling $2,400.
e. Tim paid $2,900 in taxes during the year and is due a tax refund of $450, which he hasn’t
f. Tim invested $1,600 in some common stock.
2. Nancy and Bill Thompson are preparing their 2013 cash budget. Help the Thompsons
reconcile the following differences, giving reasons to support your answers.
a. Their only source of income is Bill’s salary, which amounts to $5,000 a month before
taxes. Nancy wants to show the $5,000 as their monthly income, whereas Bill argues that
his take-home pay of $3,917 is the correct value to show.
b. Nancy wants to make a provision for fun money, an idea that Bill cannot understand. He
asks, “Why do we need fun money when everything is provided for in the budget?”
3. Use future or present value techniques to solve the following problems.
a. If you inherited $25,000 today and invested all of it in a security that paid a 7% rate of
return, how much would you have in 25 years?
b. If the average new home costs $210,000 today, how much will it cost in 10 years if the
price increases by 5% each year?
c. You think that in 15 years it will cost $214,000 to provide your child with a 4-year college
education. Will you have enough if you take $75,000 today and invest it for the next 15
years at 5%?
d. If you can earn 5%, how much will you have to save each year if you want to retire in 35
years with $1 million?
4. Simon Fellows wishes to have $400,000 in a retirement fund 20 years from now. He can
create the retirement fund by making a single lump-sum deposit today.
a. If upon retirement in 20 years Simon plans to invest $400,000 in a fund that earns 5%,
what is the maximum annual withdrawal he can make over the following 15 years?
b. How much would Simon need to have on deposit at retirement in order to withdraw
$35,000 annually over the 15 years if the retirement fund earns 8%?
c. To achieve his annual withdrawal goal of $35,000 calculated in part b, how much more
than the amount calculate.