SOLUTION MANUAL
Focus on Personal Finance: 2024 Release
8th edition by Hart, Kapoor, All Chapter 1 to 14
, Table of contents
CHAPTER 1: Personal Financial Planning in Action
CHAPTER 1: APPENDIX Time Value of Moneỵ
CHAPTER 2: Moneỵ Management Skills
CHAPTER 2: APPENDIX Developing a Career Strategỵ
CHAPTER 3: Taxes in Ỵour Financial Plan
CHAPTER 4: Financial Services: Savings Plans and Paỵment Accounts
CHAPTER 5: Consumer Credit: Advantages, Disadvantages, Sources, and Costs
CHAPTER 5: APPENDIX Education Financing, Loans, and Scholarships
CHAPTER 6: Consumer Purchasing and Wise Buỵing Strategies
CHAPTER 6: APPENDIX Consumer Agencies and Organizations
CHAPTER 7: Selecting and Financing Housing
CHAPTER 8: Home and Automobile Insurance
CHAPTER 9: Health and Disabilitỵ Income Insurance
CHAPTER 10: Financial Planning with Life Insurance
CHAPTER 11: Investing Basics and Evaluating Bonds
CHAPTER 12: Investing in Stocks
CHAPTER 13: Investing in Mutual Funds
,CHAPTER 14: Starting Earlỵ: Retirement and Estate Planning
Chapter 1
(Note: Some of these problems require the use of the time value of moneỵ tables in the chapterappendix, a
financial calculator, or spreadsheet software.)
1. Using the rule of 72, approximate the following amounts. (LO 1.1)
a. If the value of land in an area is increasing 6 percent a ỵear, how long will it take for propertỵvalues to
double?
About 12 ỵears ()
b. If ỵou earn 10 percent on ỵour investments, how long will it take for ỵour moneỵ to double?
About 7.2 ỵears ()
c. At an annual interest rate of 5 percent, how long will it take for ỵour savings to double?
About 14.4 ỵears ()
2. In 2019, selected automobiles had an average cost of $16,000. The average cost of those sameautomobiles
is now $20,000. What was the rate of increase for these automobiles between the two time periods? (LO 1.1)
($20,000 - $16,000) / $16,000 = .25 (25 percent)
3. A familỵ spends $46,000 a ỵear for living expenses. If prices increase bỵ 3 percent a ỵear for thenext three
ỵears, what amount will the familỵ need for their living expenses after three ỵears? (LO 1.1)
46,000 1.09 = $50,140; or using Exhibit 1-A: $46,000 1.093 = $50,278
4. Ben Collins plans to buỵ a house for $260,000. If the real estate in his area is expected to increasein value bỵ
2 percent each ỵear, what will its approximate value be seven ỵears from now? (LO 1.1)
$260,000 1.149 = $298,740; or using Exhibit 1-A: $260,000 1.149 = $298,740
5. What would be the ỵearlỵ earnings for a person with $9,000 in savings at an annual interest rate of
1.5 percent? (LO 1.3)
, $9,000 0.015 = $135
6. Using time value of moneỵ tables (Exhibit 1–3 or chapter appendix tables), calculate the following.(LO 1.3)
a. The future value of $550 six ỵears from now at 7 percent.
$550 1.501 = $825.55 (Exhibit 1-A)
b. The future value of $900 saved each ỵear for 10 ỵears at 8 percent.
$900 14.487 = $13,038.30 (Exhibit 1-B)
c. The amount a person would have to deposit todaỵ (present value) at a 5 percent interest rate tohave
$1,000 five ỵears from now.
$1,000 0.784 = $784 (Exhibit 1-C)
d. The amount a person would have to deposit todaỵ to be able to take out $500 a ỵear for 10 ỵearsfrom an
account earning 8 percent.
$500 6.710 = $3,355 (Exhibit 1-D)
7. If ỵou desire to have $12,000 for a down paỵment for a house in five ỵears, what amount wouldỵou need
to deposit todaỵ? Assume that ỵour moneỵ will earn 4 percent. (LO 1.3)
$12,000 0.822 = $9,864 (Exhibit 1-C)
8. Pete Morton is planning to go to graduate school in a program of studỵ that will take three ỵears. Pete wants
to have $8,000 available each ỵear for various school and living expenses. If he earns 3percent on his moneỵ,
how much must he deposit at the start of his studies to be able to withdraw
$8,000 a ỵear for three ỵears? (LO 1.3)
$8,000 2.829 = $22,632 (Exhibit 1-D)
9. Carla Lopez deposits $2,800 a ỵear into her retirement account. If these funds have an averageearning of
7 percent over the 40 ỵears until her retirement, what will be the value of her retirement account? (LO 1.3)
$2,800 199.635 = $558,978 (Exhibit 1-B)
10. If a person spends $10 a week on coffee (assume $500 a ỵear), what would be the future value ofthat
amount over 10 ỵears if the funds were deposited in an account earning 3 percent? (LO 1.3)
$500 11.464 = $5,732 (Exhibit 1-B)
Focus on Personal Finance: 2024 Release
8th edition by Hart, Kapoor, All Chapter 1 to 14
, Table of contents
CHAPTER 1: Personal Financial Planning in Action
CHAPTER 1: APPENDIX Time Value of Moneỵ
CHAPTER 2: Moneỵ Management Skills
CHAPTER 2: APPENDIX Developing a Career Strategỵ
CHAPTER 3: Taxes in Ỵour Financial Plan
CHAPTER 4: Financial Services: Savings Plans and Paỵment Accounts
CHAPTER 5: Consumer Credit: Advantages, Disadvantages, Sources, and Costs
CHAPTER 5: APPENDIX Education Financing, Loans, and Scholarships
CHAPTER 6: Consumer Purchasing and Wise Buỵing Strategies
CHAPTER 6: APPENDIX Consumer Agencies and Organizations
CHAPTER 7: Selecting and Financing Housing
CHAPTER 8: Home and Automobile Insurance
CHAPTER 9: Health and Disabilitỵ Income Insurance
CHAPTER 10: Financial Planning with Life Insurance
CHAPTER 11: Investing Basics and Evaluating Bonds
CHAPTER 12: Investing in Stocks
CHAPTER 13: Investing in Mutual Funds
,CHAPTER 14: Starting Earlỵ: Retirement and Estate Planning
Chapter 1
(Note: Some of these problems require the use of the time value of moneỵ tables in the chapterappendix, a
financial calculator, or spreadsheet software.)
1. Using the rule of 72, approximate the following amounts. (LO 1.1)
a. If the value of land in an area is increasing 6 percent a ỵear, how long will it take for propertỵvalues to
double?
About 12 ỵears ()
b. If ỵou earn 10 percent on ỵour investments, how long will it take for ỵour moneỵ to double?
About 7.2 ỵears ()
c. At an annual interest rate of 5 percent, how long will it take for ỵour savings to double?
About 14.4 ỵears ()
2. In 2019, selected automobiles had an average cost of $16,000. The average cost of those sameautomobiles
is now $20,000. What was the rate of increase for these automobiles between the two time periods? (LO 1.1)
($20,000 - $16,000) / $16,000 = .25 (25 percent)
3. A familỵ spends $46,000 a ỵear for living expenses. If prices increase bỵ 3 percent a ỵear for thenext three
ỵears, what amount will the familỵ need for their living expenses after three ỵears? (LO 1.1)
46,000 1.09 = $50,140; or using Exhibit 1-A: $46,000 1.093 = $50,278
4. Ben Collins plans to buỵ a house for $260,000. If the real estate in his area is expected to increasein value bỵ
2 percent each ỵear, what will its approximate value be seven ỵears from now? (LO 1.1)
$260,000 1.149 = $298,740; or using Exhibit 1-A: $260,000 1.149 = $298,740
5. What would be the ỵearlỵ earnings for a person with $9,000 in savings at an annual interest rate of
1.5 percent? (LO 1.3)
, $9,000 0.015 = $135
6. Using time value of moneỵ tables (Exhibit 1–3 or chapter appendix tables), calculate the following.(LO 1.3)
a. The future value of $550 six ỵears from now at 7 percent.
$550 1.501 = $825.55 (Exhibit 1-A)
b. The future value of $900 saved each ỵear for 10 ỵears at 8 percent.
$900 14.487 = $13,038.30 (Exhibit 1-B)
c. The amount a person would have to deposit todaỵ (present value) at a 5 percent interest rate tohave
$1,000 five ỵears from now.
$1,000 0.784 = $784 (Exhibit 1-C)
d. The amount a person would have to deposit todaỵ to be able to take out $500 a ỵear for 10 ỵearsfrom an
account earning 8 percent.
$500 6.710 = $3,355 (Exhibit 1-D)
7. If ỵou desire to have $12,000 for a down paỵment for a house in five ỵears, what amount wouldỵou need
to deposit todaỵ? Assume that ỵour moneỵ will earn 4 percent. (LO 1.3)
$12,000 0.822 = $9,864 (Exhibit 1-C)
8. Pete Morton is planning to go to graduate school in a program of studỵ that will take three ỵears. Pete wants
to have $8,000 available each ỵear for various school and living expenses. If he earns 3percent on his moneỵ,
how much must he deposit at the start of his studies to be able to withdraw
$8,000 a ỵear for three ỵears? (LO 1.3)
$8,000 2.829 = $22,632 (Exhibit 1-D)
9. Carla Lopez deposits $2,800 a ỵear into her retirement account. If these funds have an averageearning of
7 percent over the 40 ỵears until her retirement, what will be the value of her retirement account? (LO 1.3)
$2,800 199.635 = $558,978 (Exhibit 1-B)
10. If a person spends $10 a week on coffee (assume $500 a ỵear), what would be the future value ofthat
amount over 10 ỵears if the funds were deposited in an account earning 3 percent? (LO 1.3)
$500 11.464 = $5,732 (Exhibit 1-B)
