SOLUTION MANUAL Personal Financial Planning, 16th Edition by Randy Billingsley, Lawrence J. Gitman All Chapters 1 to 15 complete Verified editon

SOLUTION MANUAL
Personal Financial Planning, 16th Edition
by Billingsley, Gitman, Chapters 1 - 15, Complete




Table of Contents
A A A

,Part I: FOUNDATIONS OF FINANCIAL PLANNING.
A A A A A



1. Understanding the Financial Planning Process.
A A A A A



2. Developing Your Financial Statements and Plans.
A A A A A A



3. Preparing Your Taxes.
A A A



Part II: MANAGING BASIC ASSETS.
A A A A



4. Managing Your Cash and Savings.
A A A A A



5. Making Automobile and Housing Decisions.
A A A A A



Part III: MANAGING CREDIT.
A A A



6. Using Credit.
A A



7. Using Consumer Loans.
A A A



Part IV: MANAGING INSURANCE NEEDS.
A A A A



8. Insuring Your Life.
A A A



9. Insuring Your Health.
A A A



10. Protecting Your Property.
A A A



Part V: MANAGING INVESTMENTS.
A A A



11. Investment Planning.
A A



12. Investing in Stocks and Bonds.
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13. Investing in Mutual Funds and Real Estate.
A A A A A A A



Part VI: RETIREMENT AND ESTATE PLANNING.
A A A A A



14. Planning for Retirement.
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15. Preserving Your Estate.
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Chapter 1 A




Understanding the Financial Planning Process A A A A

,HowAWillAThisAAffectAMe?
TheAheartAofAfinancialAplanningAisAmakingAsureAyourAvaluesAlineAupAwithAhowAyouAspendAandAsave.ATh
atAmeansAknowingAwhereAyouAareAfinanciallyAandAplanningAonAhowAtoAgetAwhereAyouAwantAtoAbeAinAt
heAfutureAnoAmatterAwhatAlifeAthrowsAatAyou.AForAexample,AhowAshouldAyourAplanAhandleAtheAprojecti
onAthatASocialASecurityAcostsAmayAexceedArevenuesAbyA2035?AAndAwhatAifAtheAgovernmentAdecidesAt
oAraiseAtaxAratesAtoAhelpAcoverAtheAfederalAdeficit?AAnAinformedAfinancialAplanAshouldAreflectAsuchAun
certaintiesAandAmore.

ThisAchapterAoverviewsAtheAfinancialAplanningAprocessAandAexplainsAitsAcontext.ATopicsAincludeAhowA
financialAplansAchangeAtoAaccommodateAyourAcurrentAstageAinAlifeAandAtheAroleAthatAfinancialAplann
ersAcanAplayAinAhelpingAyouAachieveAyourAobjectives.AAfterAreadingAthisAchapterAyouAwillAhaveAaAgo
odAperspectiveAonAhowAtoAorganizeAyourAoverallApersonalAfinancialAplan.

LEARNING GOALS A




LG1AIdentifyAtheAbenefitsAofAusingApersonalAfinancialAplanningAtechniquesAtoAmanageAyourAfi
nances.

KeyAconceptAinAthisAsectionAisAtheAplanningAmodelAasAdisplayedAinAExhibitA1.1.AYourAstandardAofAlivin
gAisAgreatlyAimpactedAbyAyourAspendingAhabitsAandAyourAcommitmentAtoAsaving.AYourAspendingAisAme
asuredAbyAyourApropensityAtoAconsume.AWealthAisAtheAtotalAvalueAofAallApropertyAyouAownAlessAtheA
amountAthatAyouAoweAtoAothers.

ACTIVITY:A AskAtheAstudentsAtoAassumeAthatAtheyAhaveAjustAinheritedA$100,000.AWhatAwillAyouAdoAwi
thAtheAmoney?AWriteAdownAthreeAwaysAyouAwillAspendAorAuseAtheAmoney.

, AskAtheAstudentsAtoAshareAoneAitemAwithAtheAclassAandArecordAwhatAtheyAsayAsoAthatAtheAentireAclassAc
anAreflectAonAtheAanswers.AHopefully,AatAleastAaAfewAwillAmentionAinvestingAevenAifAonlyA$10,000AofAt
heAamount.A UseAtheirAanswersAtoAdiscussAtakingAcareAofAcurrentAneedsAversusAfutureAneeds.
FocusAonAtheirApropensityAtoAconsumeAandAitsAimpactAonAaccumulatingAwealth.APointAoutAtheAFinancialA
PlanningATip,A―BeASMARTAinAPlanningAYourAFinancialAGoals.‖
UseAExhibitA1.2AtoAshowAhowAtheAaverageApersonAearnsAandAspendsAtheirAmoneyAandAExhibitA1.6AtoAh
elpAtheAstudentAidentifyAwhereAtheyAareAnow.

LG2ADescribeAtheApersonalAfinancialAplanningAprocessAandAdefineAyourAgoals.

DwightAEisenhower,AarmyAgeneralAandApresident,AisAquotedAasAsayingA ―PlansAareAuseless;APlanningAisA
priceless‖.ATheAprocessAofAplanningAallowsAyouAtoAfocusAonAtheAissuesAthatAareAmostAimportantAandAtoA
beAreadyAwhenAthingsAchange.

ExhibitA1.3AlistsAtheASixAStepAFinancialAPlanningAProcess.ATheAfirstAandAmostAimportantAisAdefiningAyo
urAfinancialAgoals.AExhibitA1.6AlistsAgoalsAbyAageAtoAdemonstrateAhowAgoalsAchangeAoverAtime.AUseA
theAexamplesAinAExhibitA1.5AtoAaskAstudentsAifAtheAassumptionsAareArealistic.AYes,AtheAanswerAisAinAthe
Aexhibit,AbutAmanyAwillAnotAhaveAreadAchapterAatAthisApoint.AForAyourAuse,AtheAassumptionsAare:




AssumptionA1:ASavingAaAfewAthousandAdollarsAaAyearAshouldAprovideAenoughAtoAfundAmyAchild‘sAc
ollegeAEducation.
AssumptionA2:AAnAemergencyAfundAlastingA3AmonthsAshouldAbeAadequate.
AssumptionA3:AIAwillAbeAableAtoAretireAatA65AandAshouldAhaveAplentyAtoAliveAonAinAretirement.A
AssumptionA4:AI‘mArelyingAonAtheAruleAofAthumbAthatAIAwillAneedAonlyA70ApercentAofAmyApre-
retirementAincomeAtoAmanageAnicelyAinAretirement.
A




ThereAareAseveralAworksheetsAinAtheAbook.AWorksheetA1.1AgivesAtheAstudentAaAformatAtoAwriteAdow
nAtheirAPersonalAFinancialAGoals.AThereAisApowerAinAwritingAdownAgoalsA[andAmostAanyAotherAplan].AR
ecordingAtheAgoalAandAthenAreviewingAthreeAmonthsAlaterAwillAhelpAyouAtoAkeepAfocusAonAtheAgoal.

LG3AExplainAtheAlifeAcycleAofAfinancialAplans,AtheirAroleAinAachievingAyourAfinancialAgoals,Aho
wAtoAdealAwithAspecialAplanningAconcerns,AandAtheAuseAofAprofessionalAfinancialAplanners.

ExhibitA1.7AcanAhelpAfocusAtheAattentionAonAhowAgoalsAdifferAbetweenAtheAvariousAstagesAofAlife.ASect
ionA1-3bAlistsAvariousAdecisionsAthatAyouAwillAhaveAtoAmakeAoverAyourAlife.ATheAsectionA1-
3cAaddressesASpecialAPlanningAConcerns.AWorksheetA1.2AfocusesAonAtheAfinancialAbenefitAtoAtheAfam
ilyAofAtheAsecondAincome.AIfAtheAsecondAincomeAisAfromAaAminimumAwageAjob,AitAmayAnotAbeAaAgoodAfi
nancialAdecision.AOfAcourseAhavingAaAjob,AevenAaAminimumAwageAjob,AmayAgiveAtheApersonApsychicAin
comeAthatAwillAoverrideAtheAfinancialAimpact.

WhileAperhapsAoffAtopic,AIArecallAaAhighAschoolAscienceAteacherAwhoAwasAaAsmoker.AHeAwalkedAthrou
ghAtheAamountAofAmoneyAheAspentAonApurchasingAtobaccoAproducts.A ThatAcomputationAhadAa