CRPC Practice Exam Solved 100%

Mary Goodwin's financial situation is as follows: Cash/cash equivalents $15,000 Short-term debts $8,000 Long-term debts $133,000 Tax expense $7,000 Auto note payments $4,000 Invested assets $60,000 Use assets $188,000 What is her net worth? A)$111,000 B)$137,000 C)$122,000 D)$263,000 - ANSWER-C At the end of last year, Bill Greer has the following financial information: Salaries$70,000Auto payments$5,000Insurance payments$3,800Food$8,000Credit card balance$10,000Dividends$1,100Utilities$3,500Mortgage payments$14,000Taxes$13,000Clothing$9,000Interest income$2,100Checking account$4,000Vacations$8,400Donations$5,800 What is the cash flow surplus or (deficit) for Bill? A) $2,700 B) $6,500 C) $10,700 D) ($500) - ANSWER-A Which of the following are correct statements about income replacement percentages? I.Income replacement percentages are typically much higher for those with higher preretirement incomes. II.Income replacement percentages vary between low-income and high-income retirees. III.Income replacement ratios should not be used as the only basis for planning. IV.Income replacement ratios are useful for younger clients as a guide to their long-range planning and investing. A) I and IV B) I and II C) II and III D) II, III, and IV - ANSWER-D If Tom and Jenny want to save a fixed amount annually to accumulate $2 million by their retirement date in 25 years (rather than an amount that grows with inflation each year), what level annual end-of-year savings amount will they need to deposit each year, assuming their savings earn 7% annually? A) $55,692 B) $31,621 C) $29,552 D) $54,130 - ANSWER-B Bill and Lisa Hahn have determined that they will need a monthly income of $6,000 during retirement. They expect to receive Social Security retirement benefits amounting to $3,500 per month at the beginning of each month. Over the 12 remaining years of their preretirement period, they expect to generate an average annual after-tax investment return of 8%; during their 25-year retirement period, they want to assume a 6% annual after-tax investment return compounded monthly. They want to start their monthly retirement withdrawals on the first day they retire. What is the lump sum needed at the beginning of retirement to fund this income stream? A) $931,241 B) $388,017 C) $389,957 D) $598,504 - ANSWER-C Chris and Eve Bronson have analyzed their current living expenses and estimated their retirement income need, net of expected Social Security benefits, to be $90,000 in today's dollars. They are confident that they can earn a 7% after-tax return on their investments, and they expect inflation to average 4% over the long term. Determine the lump sum amount the Bronsons will need at the beginning of retirement to fund their retirement income needs, using the worksheet below. (1) Adjust income deficit for inflation over the preretirement period:$ 90,000present value of retirement income deficit25number of periods until retirement4%% inflation rateFuture value of income deficit in first retirement year$239,925(2) Determine retirement fund needed to meet income deficit:$239,925payment (future value of income deficit in first retirement year)30number of periods in retirement