CRPC ACTUAL TEST QUESTIONS WITH
COMPLETE ANSWER KEY
●● How do you calculate the inflation-adjusted rate of return?
Answer: 1 plus the Rate of Return
Divided by
1 plus the interest rate
minus one
multiplied by 100
●● Tom has been promised a stream of $40,000 annual payments at the
end of each year for 25 years. The present value of these payments
discounted at a rate of 5% is which one of the following amounts?
Answer: Step One - The problem says END in it so you have to set your
calculator to the END mode.
Step two - Enter the $40000 as a PMT
, Step Three - Enter 25 as the N.
Step Four - Enter 5 as the I/R
Step Six - Hit PV.
$563,758
●● Nick wants to maintain the purchasing power of $75,000 (in today's
dollars) in retirement. If inflation continues to average 3.5%,
approximately what amount will Nick need in 20 years to equal the
purchasing power of $75,000 today? (Round your answer.)
Answer: If you know the Rule of 72, and you divide 3.5 into 72, you
arrive at the number 20, which is the number of years it will take for a
sum to double. With a calculator, you can solve for the future value of
$75,000 over 20 years at 3.5%.
Keystrokes: 20 N, 3.5 I/YR, 75,000 PV, FV = $149,234; rounded =
$150,000
●● What is the second step in the retirement planning process?
Answer: The second step in the retirement planning process is to gather
client data, including goals and expectations
●● What is the first step in the retirement planning process?
COMPLETE ANSWER KEY
●● How do you calculate the inflation-adjusted rate of return?
Answer: 1 plus the Rate of Return
Divided by
1 plus the interest rate
minus one
multiplied by 100
●● Tom has been promised a stream of $40,000 annual payments at the
end of each year for 25 years. The present value of these payments
discounted at a rate of 5% is which one of the following amounts?
Answer: Step One - The problem says END in it so you have to set your
calculator to the END mode.
Step two - Enter the $40000 as a PMT
, Step Three - Enter 25 as the N.
Step Four - Enter 5 as the I/R
Step Six - Hit PV.
$563,758
●● Nick wants to maintain the purchasing power of $75,000 (in today's
dollars) in retirement. If inflation continues to average 3.5%,
approximately what amount will Nick need in 20 years to equal the
purchasing power of $75,000 today? (Round your answer.)
Answer: If you know the Rule of 72, and you divide 3.5 into 72, you
arrive at the number 20, which is the number of years it will take for a
sum to double. With a calculator, you can solve for the future value of
$75,000 over 20 years at 3.5%.
Keystrokes: 20 N, 3.5 I/YR, 75,000 PV, FV = $149,234; rounded =
$150,000
●● What is the second step in the retirement planning process?
Answer: The second step in the retirement planning process is to gather
client data, including goals and expectations
●● What is the first step in the retirement planning process?
