CRPC FINAL EXAM REVIEW 2025 NEWEST EXAM FORM A AND B COMPLETE QUESTIONS WITH DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS) /ALREADY GRADED A+

CRPC FINAL EXAM REVIEW 2025 NEWEST EXAM FORM A AND B COMPLETE QUESTIONS WITH DETAILED VERIFIED ANSWERS (100% CORRECT ANSWERS) /ALREADY GRADED A+ 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? - Ans →Assets = $263,000; liabilities = $141,000, so net worth is $122,000. Taxes and auto note payments appear on the cash flow statement. 1-3 Salaries$70,000 Auto payments$5,000 Insurance payments$3,800 Food$8,000 Credit card balance$10,000 Dividends$1,100 Utilities$3,500 Mortgage payments$14,000 Taxes$13,000 Clothing$9,000 Interest income$2,100 Checking account$4,000 Vacations$8,400 Donations$5,800 What is the cash flow surplus or (deficit) for Bill? - Ans →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 would be on the statement of financial position. LO 1-3 correct statements about income replacement percentages - Ans →Income replacement percentages are typically much higher for those with lower preretirement incomes. Income replacement percentages vary between low-income and high-income retirees. Income replacement ratios should not be used as the only basis for planning. Income replacement ratios are useful for younger clients as a guide to their long-range planning and investing. The inverse of Option I is true. Those with a lower preretirement income typically need a much higher income replacement percentage in retirement. LO 1-4 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? - Ans →Set your calculator to the "End" mode and "1 P/Yr." Inputs: FV = 2000000, I/YR = 7, N = 25, PV = 0, then PMT = $31,621 1-4 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? - Ans →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 stream is level. To calculate the lump sum needed at the beginning of retirement, discount the 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 LO 1-4 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 The lump sum needed at the beginning of the - Ans →This PVAD calculation requires that the calculator be set for beginning-of-period payments. First, the annual retirement income deficit is expressed in retirement-year-one dollars, resulting in a $239,925