CRPC EXAM ACTUAL EXAM 180 QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) |ALREADY GRADED A+

CRPC EXAM 2024-2025 ACTUAL
EXAM 180 QUESTIONS AND
CORRECT DETAILED ANSWERS
WITH RATIONALES (VERIFIED
ANSWERS) |ALREADY GRADED A+



MaryGoodwin'sfinancialsituationisasfollows:

Cash/cashequivalents$15,000

Short-termdebts$8,000

Long-termdebts$133,000

Taxexpense$7,000

Autonotepayments$4,000

Investedassets$60,000

Useassets$188,000

Whatishernetworth?-
Correctanswer~Assets=$263,000;liabilities=$141,000,sonetworthis$122,000.Taxesandauton
otepaymentsappearonthecashflowstatement.1-3



Salaries$70,000

Autopayments$5,000

Insurancepayments$3,800

Food$8,000

Creditcardbalance$10,000

Dividends$1,100

Utilities$3,500

,Mortgagepayments$14,000

Taxes$13,000

Clothing$9,000

Interestincome$2,100

Checkingaccount$4,000

Vacations$8,400

Donations$5,800

Whatisthecashflowsurplusor(deficit)forBill?-
Correctanswer~Income=$70,000+$1,100+$2,100=$73,200.Expenses=$5,000+$3,800+$8,000
+$3,500+$14,000+$13,000+$9,000+$8,400+$5,800=$70,500,sothereisasurplusof$2,700.The
checkingaccountandcreditcardbalanceswouldbeonthestatementoffinancialposition.

LO1-3



correctstatementsaboutincomereplacementpercentages-
Correctanswer~Incomereplacementpercentagesaretypicallymuchhigherforthosewithlowerpr
eretirementincomes.



Incomereplacementpercentagesvarybetweenlow-incomeandhigh-incomeretirees.



Incomereplacementratiosshouldnotbeusedastheonlybasisforplanning.



Incomereplacementratiosareusefulforyoungerclientsasaguidetotheirlong-
rangeplanningandinvesting.




TheinverseofOptionIistrue.Thosewithalowerpreretirementincometypicallyneedamuchhigheri
ncomereplacementpercentageinretirement.

LO1-4

,IfTomandJennywanttosaveafixedamountannuallytoaccumulate$2millionbytheirretirementda
tein25years(ratherthananamountthatgrowswithinflationeachyear),whatlevelannualend-of-
yearsavingsamountwilltheyneedtodepositeachyear,assumingtheirsavingsearn7%annually?-
Correctanswer~Setyourcalculatortothe"End"modeand"1P/Yr."Inputs:FV=2000000,I/YR=7,N=
25,PV=0,thenPMT=$31,621



1-4



BillandLisaHahnhavedeterminedthattheywillneedamonthlyincomeof$6,000duringretirement
.TheyexpecttoreceiveSocialSecurityretirementbenefitsamountingto$3,500permonthatthebeg
inningofeachmonth.Overthe12remainingyearsoftheirpreretirementperiod,theyexpecttogene
rateanaverageannualafter-taxinvestmentreturnof8%;duringtheir25-
yearretirementperiod,theywanttoassumea6%annualafter-
taxinvestmentreturncompoundedmonthly.Theywanttostarttheirmonthlyretirementwithdraw
alsonthefirstdaytheyretire.



Whatisthelumpsumneededatthebeginningofretirementtofundthisincomestream?-
Correctanswer~Themonthlyretirementincomeneedisnotspecifiedas"today'sdollars,"andnoinf
lationratespecified;therefore,itmustbeassumedthatthe$2,500netmonthlyincomeneedrepres
entsretirementdollars,andtheretirementperiodincomestreamislevel.Tocalculatethelumpsum
neededatthebeginningofretirement,discountthestreamofmonthlyincomepaymentsattheinve
stmentreturnrate:

10BII+PVADcalculation:

SetcalculatoronBEGand12periodsperyear,theninputthefollowing:

2,500[PMT]

25[SHIFT][N]

6[I/YR]

0[FV]

SolveforPV=$389,957

LO1-4



ChrisandEveBronsonhaveanalyzedtheircurrentlivingexpensesandestimatedtheirretirementin
comeneed,netofexpectedSocialSecuritybenefits,tobe$90,000intoday'sdollars.Theyareconfide

, ntthattheycanearna7%after-
taxreturnontheirinvestments,andtheyexpectinflationtoaverage4%overthelongterm.

DeterminethelumpsumamounttheBronsonswillneedatthebeginningofretirementtofundtheirr
etirementincomeneeds,usingtheworksheetbelow.



(1)Adjustincomedeficitforinflationoverthepreretirementperiod:$90,000presentvalueofretire
mentincomedeficit25numberofperiodsuntilretirement4%%inflationrateFuturevalueofincome
deficitinfirstretirementyear$239,925



(2)Determineretirementfundneededtomeetincomedeficit:$239,925payment(futurevalueofin
comedeficitinfirstretirementyear)30numberofperiodsinretirement



Thelumpsumneededatthebeginningofthe-
Correctanswer~ThisPVADcalculationrequiresthatthecalculatorbesetforbeginning-of-
periodpayments.First,theannualretirementincomedeficitisexpressedinretirement-year-
onedollars,resultingina$239,925incomedeficitinthefirstretirementyear.Thisincomedeficitgro
wswithinflationoverthe30-yearretirementperiod,andtheretirementfundearnsa7%return.

Thecalculatorinputsare



$239,925,[PMT];

30,[N];

2.8846,[I/YR].(1.07/1.04)-1x100

Solvefor[PV],



todeterminetheretirementfundthatwillgeneratethisincomestream.Ifyouenter2.8846directlyi
ntothecalculator,youwillget$4,911,265.IfyouusetheequationtocomputeI/YR,andthenhittheI/
YRbuttonyouwillget$4,911,256.Eitherwaytheanswerisclear.Thedifferenceisthatwhenyoucalcu
latetheI/YR,thecalculatortakestheinterestrateouttoninedecimalplaces.Ifyouenterinthe2.8846
,thenthecalculatoronlytakestheinterestratetofourdecimalplaces.

LO1-4