SOLUTION MANUAL Personal Finance, 14th Edition By Garman, all Chapter 1-17

SOLUTION MANUAL

Personal Finance, 14th Edition

By Garman, all Chapter 1-17

,TABLE OF CONTENTS e e e




Part I: FINANCIAL PLANNING.
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1. Understanding Personal Finance.
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2. Career Planning.
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3. Financial Statements, Goals, and Budgets.
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Part II: MONEY MANAGEMENT.
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4. Managing Income Taxes.
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5. Managing Checking and Savings Accounts.
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6. Building and Maintaining Good Credit.
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7. Credit Cards and Consumer Loans.
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8. Vehicles and Other Major Purchases.
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9. Obtaining Affordable Housing.
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Part III: INCOME AND ASSET PROTECTION.
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10. Managing Property and Liability Risk.
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11. Planning for Health Care Expenses.
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12. Life Insurance Planning.
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Part IV: INVESTMENTS.
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13. Investment Fundamentals.
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,14. Investing in Stocks and Bonds.
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15. Mutual and Exchange-Traded Funds.
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16. Real Estate and High-Risk Investments.
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17. Retirement and Estate Planning.
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Solution and Answer Guide e e e


GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
E E E E E E E E E E




TABLE OF CONTENTS E E




AnswersetoeChaptereConcepteChecks ......................................................................................... 2
WhateDoeYoueRecommendeNow? .............................................................................................. 4
Let’seTalkeAbouteIt ......................................................................................................................................................... 5
DoetheeMath ............................................................................................................................... 6
FinancialePlanningeCases ............................................................................................................ 8
ExtendedeLearning ...................................................................................................................10

, ANSWERS TO CHAPTER CONCEPT CHECKS
E E E E




LO1.1eRecognizeetheekeysetoeachievingefinancialesuccess.
1. Explainetheefiveestepseinetheefinancialeplanningeprocess.

Answer:eThereeareefiveefundamentalestepsetoetheepersonalefinancialeplanningeprocess:e(1)eevaluatee
yourefinancialehealthetoeyoureeducationeandecareerechoice;e(2)edefineeyourefinancialegoals;e(3)edevel
opeaeplaneofeactionetoeachieveeyouregoals;e(4)eimplementespendingeandesavingeplansetoemonitorean
decontroleprogressetowardeyouregoals;eande(5)erevieweyourefinancialeprogresseandemakeechangeseas
eappropriate.



2. Distinguisheamongefinancialesuccess,efinancialesecurity,eandefinancialehappiness.

Answer:eFinancialesuccesseisetheeachievementeofefinancialeaspirationsethateareedesired,eplanned,eo
reattempted.eSuccesseisedefinedebyetheeindividualeorefamilyethateseekseit.eFinancialesuccessemayebeed
efinedeasebeingeableetoeliveeaccordingetoeone’sestandardeofeliving.eFinancialesecurityeisethatecomfor
tableefeelingethateyourefinancialeresourcesewillebeeadequateetoefulfilleanyeneedseyouehaveeasewellease
yourewants.eFinancialehappinesseisetheeexperienceeyouehaveewheneyoueareesatisfiedewithemoneyem
atters.ePeopleewhoeareehappyeaboutetheirefinancesewilleseeeaespillovereintoepositiveefeelingseabouteli
feeinegeneral.

3. Summarizeewhateyouewilleaccomplishestudyingepersonalefinance.

Answer:eSeveralethingsecanebeeaccomplishedebyestudyingepersonalefinance.eRecognizeehowetoemana
geeunexpectedeandeexpectedefinancialeevents.ePayeaselittleeasepossibleeineincomeetaxes.eUnderstandeh
owetoeeffectivelyecomparisoneshopeforevehicleseandehomes.eProtectewhateweeown.eInvestewisely.eAccu
mulateeandeprotectetheewealthethateweemayechooseetoespendeduringeourenon-
workingeyearse(e.g.,eretirement)eoredonate.

4. Whateareetheebuildingeblocksetoeachievingefinancialesuccess?

Answer:eTheebuildingeblockseforeachievingefinancialesuccesseincludeeaefoundationeoferegulareincom
eethateprovidesetheemeansetoesupporteyourelifestyleeandesaveeforedesiredegoalseinetheefuture.eTheefo
undationesupportseaebaseeofevariousebankingeaccounts,einsuranceeprotection,eandeemployeeebenef
its.eTheneweecaneestablishegoals,eaerecordkeepingesystem,eaebudget,eandeaneemergencyesavingsefun
d.eWeewillealsoemanageevariouseexpensesesucheasehousing,etransportation,einsurance,eandetheepaym
enteofetaxes.eWeewillealsoeneedetoehandleecredit,esavings,eandeeducationalecosts.eFinally,eweeinvestein
evariouseinvestmentealternativesesucheasemutualefunds,estocks,eandebonds,eofteneforeretirement.eAse

aeresulteofealletheseebuildingeblocks,eweeareemoreeaptetoehaveeaefinanciallyesuccessfulelife.

LO1.2eUnderstandehowetheeeconomyeaffectseyourepersonalefinancialesuccess.
1. Summarizeetheephaseseofetheebusinessecycle.

Answer:eTheebusinessecycleeentailseaewavelikeepatterneoferisingeandefallingeeconomiceactivityeaseme
asuredebyeeconomiceindicatorselikeeunemploymenterateseoretheegrossedomesticeproduct.eTheephase
seofetheebusinessecycleeincludeeexpansione(preferredestage—