CRPC EXAM 1 2023-2024 ACTUAL EXAM COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS
WITH RATIONALES (VERIFIED ANSWERS) |ALREADY
GRADED A+
1. Mary Goodwin's financial situation is as follows:
Cash/cash equivalents$15,000S
hort-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?: $122,000
Assets = $263,000; liabilities = $141,000, so net worth is $122,000. Taxes and auto
note payments appear on the cash flow statement.
2. For the year ending December 31, XXXX, Bill Greer has the following finan-
cial information:
Salaries$70,000Auto payments$5,000Insurance$3,800Food$8,000Cred-
it card balance$10,000Dividends$1,100Utilities$3,500Mortgage pay-
ments$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?: $2,700
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, so
there is a surplus of $2,700. The checking account and credit card balances wouldbe o
the statement of financial position.
3. Which of the following are correct statements about income replacement
percentages?: II, III, and IV
The inverse of Option I is true. Those with a lower preretirement income typicallyneed
a much higher income replacement percentage in retirement.
4. 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?: -
$31,621
,CRPC EXAM 1 2023-2024 ACTUAL EXAM COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS
WITH RATIONALES (VERIFIED ANSWERS) |ALREADY
GRADED A+
Set calculator "End" and "1 P/Yr" Inputs: FV = 2000000, i = 7, N = 25, PV = 0, thenPmt
= $31,621
5. 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
,CRPC EXAM 1 2023-2024 ACTUAL EXAM COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS
WITH RATIONALES (VERIFIED ANSWERS) |ALREADY
GRADED A+
benefits amounting to $3,500 per month at the beginning of each month. Overthe
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.
What is the lump sum needed at the beginning of retirement to fund this
income stream?: $389,957
The monthly retirement income need is not specified as "today's dollars," and no
inflation rate specified; therefore, it must be assumed that the $2,500 net monthly
income need represents retirement dollars, and the retirement period income streamis
level. To calculate the lump sum needed at the beginning of retirement, discountthe
stream of monthly income payments at the investment return rate:
10BII+ PVAD calculation:
Set calculator on BEG and 12 periods per year, then input the following:
2,500 [PMT]
25 [SHIFT] [N]
6 [I/YR]
0 [FV]
Solve for PV = $389,957
6. Chris and Eve Bronson have analyzed their current living expenses and es-
timated 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 retire-
ment 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
, CRPC EXAM 1 2023-2024 ACTUAL EXAM COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS
WITH RATIONALES (VERIFIED ANSWERS) |ALREADY
GRADED A+
The lump sum needed at the beginning of the Bronsons' retirement periodis:
$4,911,256
This PVAD calculation requires that the calculator be set for beginning-of-peri-
QUESTIONS AND CORRECT DETAILED ANSWERS
WITH RATIONALES (VERIFIED ANSWERS) |ALREADY
GRADED A+
1. Mary Goodwin's financial situation is as follows:
Cash/cash equivalents$15,000S
hort-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?: $122,000
Assets = $263,000; liabilities = $141,000, so net worth is $122,000. Taxes and auto
note payments appear on the cash flow statement.
2. For the year ending December 31, XXXX, Bill Greer has the following finan-
cial information:
Salaries$70,000Auto payments$5,000Insurance$3,800Food$8,000Cred-
it card balance$10,000Dividends$1,100Utilities$3,500Mortgage pay-
ments$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?: $2,700
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, so
there is a surplus of $2,700. The checking account and credit card balances wouldbe o
the statement of financial position.
3. Which of the following are correct statements about income replacement
percentages?: II, III, and IV
The inverse of Option I is true. Those with a lower preretirement income typicallyneed
a much higher income replacement percentage in retirement.
4. 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?: -
$31,621
,CRPC EXAM 1 2023-2024 ACTUAL EXAM COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS
WITH RATIONALES (VERIFIED ANSWERS) |ALREADY
GRADED A+
Set calculator "End" and "1 P/Yr" Inputs: FV = 2000000, i = 7, N = 25, PV = 0, thenPmt
= $31,621
5. 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
,CRPC EXAM 1 2023-2024 ACTUAL EXAM COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS
WITH RATIONALES (VERIFIED ANSWERS) |ALREADY
GRADED A+
benefits amounting to $3,500 per month at the beginning of each month. Overthe
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.
What is the lump sum needed at the beginning of retirement to fund this
income stream?: $389,957
The monthly retirement income need is not specified as "today's dollars," and no
inflation rate specified; therefore, it must be assumed that the $2,500 net monthly
income need represents retirement dollars, and the retirement period income streamis
level. To calculate the lump sum needed at the beginning of retirement, discountthe
stream of monthly income payments at the investment return rate:
10BII+ PVAD calculation:
Set calculator on BEG and 12 periods per year, then input the following:
2,500 [PMT]
25 [SHIFT] [N]
6 [I/YR]
0 [FV]
Solve for PV = $389,957
6. Chris and Eve Bronson have analyzed their current living expenses and es-
timated 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 retire-
ment 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
, CRPC EXAM 1 2023-2024 ACTUAL EXAM COMPLETE
QUESTIONS AND CORRECT DETAILED ANSWERS
WITH RATIONALES (VERIFIED ANSWERS) |ALREADY
GRADED A+
The lump sum needed at the beginning of the Bronsons' retirement periodis:
$4,911,256
This PVAD calculation requires that the calculator be set for beginning-of-peri-
