Solution and Answer Guide: Garman/Fox, Personal Finance 14e, Chapter 1: Thinking Like a Financial Planner
Solution and Answer Guide
GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
TABLE OF CONTENTS
Answers to Chapter Concept Checks ........................................................................................................ 2
What Do You Recommend Now? .............................................................................................................. 4
Let’s Talk About It...................................................................................................................................... 5
Do the Math ................................................................................................................................................. 6
Financial Planning Cases ............................................................................................................................ 8
Extended Learning .................................................................................................................................... 10
© 2024 Cengage. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
, Solution #zand #zAnswer #zGuide: #zGarman/Fox, #zPersonal #zFinance #z14e, #zChapter #z1: #zThinking #zLike #za
#zFinancial #zPlanner
ANSWERS TO CHAPTER CONCEPT CHECKS
#Z #Z #Z #Z
LO1.1 #zRecognize #zthe #zkeys #zto #zachieving #zfinancial #zsuccess.
1. Explain #zthe #zfive #zsteps #zin #zthe #zfinancial #zplanning #zprocess.
Answer: #zThere #zare #zfive #zfundamental #zsteps #zto #zthe #zpersonal #zfinancial #zplanning #zprocess: #z(1)
#zevaluate #zyour #zfinancial #zhealth #zto #zyour #zeducation #zand #zcareer #zchoice; #z(2) #zdefine #zyour #zfinancial
#zgoals; #z(3) #zdevelop #za #zplan #zof #zaction #zto #zachieve #zyour #zgoals; #z(4) #zimplement #zspending #zand #zsaving
#zplans #zto #zmonitor #zand #zcontrol #zprogress #ztoward #zyour #zgoals; #zand #z(5) #zreview #zyour #zfinancial
#zprogress #zand #zmake #zchanges #zas #zappropriate.
2. Distinguish #zamong #zfinancial #zsuccess, #zfinancial #zsecurity, #zand #zfinancial #zhappiness.
Answer: #zFinancial #zsuccess #zis #zthe #zachievement #zof #zfinancial #zaspirations #zthat #zare #zdesired, #zplanned,
#zor #zattempted. #zSuccess #zis #zdefined #zby #zthe #zindividual #zor #zfamily #zthat #zseeks #zit. #zFinancial #zsuccess
#zmay #zbe #zdefined #zas #zbeing #zable #zto #zlive #zaccording #zto #zone’s #zstandard #zof #zliving. #zFinancial #zsecurity
#zis #zthat #zcomfortable #zfeeling #zthat #zyour #zfinancial #zresources #zwill #zbe #zadequate #zto #zfulfill #zany #zneeds
#zyou #zhave #zas #z well #zas #zyour #z wants. #zFinancial #zhappiness #zis #zthe #zexperience #zyou #zhave #z when #zyou
#zare #zsatisfied #zwith #z money #z matters. #zPeople #z who #zare #zhappy #zabout #ztheir #zfinances #z will #zsee #za
#zspillover #zinto #zpositive #zfeelings #zabout #zlife #zin #zgeneral.
3. Summarize #zwhat #zyou #zwill #zaccomplish #zstudying #zpersonal #zfinance.
Answer: #zSeveral #zthings #zcan #zbe #zaccomplished #zby #zstudying #zpersonal #zfinance. #zRecognize #zhow #zto
#zmanage #zunexpected #zand #zexpected #zfinancial #zevents. #zPay #zas #zlittle #zas #zpossible #zin #zincome #ztaxes.
#zUnderstand #zhow #zto #zeffectively #zcomparison #zshop #zfor #zvehicles #zand #zhomes. #zProtect #zwhat #zwe #zown.
#zInvest #zwisely. #zAccumulate #zand #zprotect #zthe #zwealth #zthat #zwe #zmay #zchoose #zto #zspend #zduring #zour #znon-
working #zyears #z(e.g., #zretirement) #zor #zdonate.
4. What #zare #zthe #zbuilding #zblocks #zto #zachieving #zfinancial #zsuccess?
Answer: #zThe #zbuilding #zblocks #zfor #zachieving #zfinancial #zsuccess #zinclude #za #zfoundation #zof #zregular
#zincome #zthat #zprovides #zthe #zmeans #zto #zsupport #zyour #zlifestyle #zand #zsave #zfor #zdesired #zgoals #zin #zthe
#zfuture. #zThe #zfoundation #zsupports #za #zbase #zof #zvarious #zbanking #zaccounts, #zinsurance #zprotection, #zand
#zemployee #zbenefits. #zThen #zwe #zcan #zestablish #zgoals, #za #zrecordkeeping #zsystem, #za #zbudget, #zand #zan
#zemergency #zsavings #zfund. #zWe #z will #zalso #zmanage #zvarious #zexpenses #zsuch #zas #zhousing, #ztransportation,
#zinsurance, #zand #zthe #zpayment #zof #ztaxes. #zWe #zwill #zalso #zneed #zto #zhandle #zcredit, #zsavings, #zand
#zeducational #zcosts. #zFinally, #zwe #zinvest #zin #zvarious #zinvestment #zalternatives #zsuch #zas #zmutual #zfunds,
#zstocks, #zand #zbonds, #zoften #zfor #zretirement. #zAs #za #zresult #zof #zall #zthese #zbuilding #zblocks, #zwe #zare #zmore
#zapt #zto #zhave #za #zfinancially #zsuccessful #zlife.
LO1.2 #zUnderstand #zhow #zthe #zeconomy #zaffects #zyour #zpersonal #zfinancial #zsuccess.
1. Summarize #zthe #zphases #zof #zthe #zbusiness #zcycle.
Answer: #zThe #zbusiness #zcycle #zentails #za #zwavelike #zpattern #zof #zrising #zand #zfalling #zeconomic #zactivity
#zas #zmeasured #zby #zeconomic #zindicators #zlike #zunemployment #zrates #zor #zthe #zgross #zdomestic #zproduct.
#zThe #zphases #zof #zthe #zbusiness #zcycle #zinclude #zexpansion #z(preferred #zstage—production #zis #zhigh,
#zunemployment #zlow, #zinterest #zrates #zlow #zor #zfalling, #zstock #zmarket #zand #zconsumer #zdemand #zhigh),
#zpeak, #zcontraction, #zdownturn, #ztrough, #zand #zrecovery.
2. Describe #ztwo #zstatistics #zthat #zhelp #zpredict #zthe #zfuture #zdirection #zof #zthe #zeconomy.
Answer: #zForecasting #zthe #zstate #zof #zthe #zeconomy #zinvolves #zpredicting, #zestimating, #zor #zcalculating
#z what #z will #zhappen #zin #zadvance. #zWe #zneed #zto #zbe #zable #zto #zforecast #zthe #zstate #zof #zthe #zeconomy,
© #z2024 #zCengage. #zAll #zRights #zReserved. #zMay #znot #zbe #zscanned, #zcopied, #zor #zduplicated, #zor #zposted #zto #za 2
#zpublicly #zaccessible
website, #zin #zwhole #zor #zin #zpart.
, Solution #zand #zAnswer #zGuide: #zGarman/Fox, #zPersonal #zFinance #z14e, #zChapter #z1: #zThinking #zLike #za
#zFinancial #zPlanner
#zinflation, #zand #zinterest #zrates #zso #zthat #zwe #zhave #zadvance #zwarning #zof #zthe #zdirections #zand #zstrength #zof
#zchanges #zin #zeconomic #ztrends #zsince #zthey #zwill #zaffect #zour #zpersonal #zfinances. #zTwo #zstatistics #zwe
#zcould #zwatch #zare #zthe #zconsumer #zconfidence #zindex #z(how #zconsumers #zfeel #zabout #zthe #zeconomy #zand
#ztheir #zpersonal #zfinances) #zand #zthe #zindex #zof #zleading #zeconomic #zindicators #z(composite #zindex,
#zaverages #zten #zcomponents #zof #zeconomic #zgrowth).
© #z2024 #zCengage. #zAll #zRights #zReserved. #zMay #znot #zbe #zscanned, #zcopied, #zor #zduplicated, #zor #zposted #zto #za 3
#zpublicly #zaccessible
website, #zin #zwhole #zor #zin #zpart.
, Solution #zand #zAnswer #zGuide: #zGarman/Fox, #zPersonal #zFinance #z14e, #zChapter #z1: #zThinking #zLike #za
#zFinancial #zPlanner
3. Give #zan #zexample #zof #zhow #zinflation #zaffects #zincome #zand #zconsumption.
Answer: #zInflation #zreduces #zthe #zpurchasing #zpower #zof #zthe #zdollar. #zThis #zmeans #zthat #zour #zincome
#z will #znot #zgo #zas #zfar #zand, #zthus, #zin #zreal #zterms #zwill #zbe #zlowered #zby #zinflation. #zBecause #zitems #zcost
#zmore, #z we #z will #zhave #zto #zconsume #zless #zand #zmay #zcut #zback #zon #zsome #zexpenditures #zto #zbe #zable #zto
#zafford #zthose #z with #za #zhigher #zpriority.
LO1.3 #zThink #zlike #zan #zeconomist #zwhen #zmaking #zfinancial #zdecisions.
1. Define #zopportunity #zcost #zand #zgive #zan #zexample #zof #zhow #zopportunity #zcosts #zmight #zaffect #zyour
#zfinancial #zdecision #zmaking.
Answer: #zThe #zopportunity #zcost #zof #za #zdecision #zis #zmeasured #zas #zthe #zvalue #zof #zthe #znext-best #zalternative
#zthat #zmust #zbe #zforgone. #zIf #zwe, #zfor #zexample, #zput #zour #zretirement #zsavings #zin #za #zregular #zsavings
#zaccount #zinstead #zof #zin #za #ztax- #zsheltered #zretirement #zaccount, #z we #z may #zbe #zforgoing #zthe #ztax #zbenefits
#zassociated #zwith #zinvesting #zin #zretirement #zaccounts #zsuch #zas #zIRAs #zor #z401(k) #zplans. #zIn #zanother
#zexample, #zif #zwe #zdecide #zto #zborrow #zthe #z maximum #zstudent #zloan #zamount #zfor #z which #zwe #zqualify #zto
#zlive #za #zbit #zmore #zcomfortably #z while #zin #zcollege, #zwe #z will #znot #zbe #zable #zto #zlive #zas #znicely, #zsave #zas
#zmuch #zfor #zthe #zdown #zpayment #zon #za #zhome #zor #zsave #zfor #zretirement #zonce #zwe #zgraduate #zbecause #zof
#zthe #zhigher #zloan #zpayments.
2. Explain #zand #zgive #zan #zexample #zof #zhow #zmarginal #zutility #zand #zmarginal #zcost #zmake #zsome
#zfinancial #zdecisions #zeasier.
Answer: #zMarginal #zanalysis #zfocuses #zon #zthe #znext #zincrement #zof #zusefulness #zor #zcost #zwhen #zmaking
#zfinancial #zdecisions. #zMarginal #zutility #zis #zthe #zextra #zsatisfaction #zderived #zfrom #zhaving #zone #zmore
#zincremental #zunit #zof #za #zproduct #zor #zservice. #zMarginal #zcost #zis #zthe #zadditional #zcost #zof #zthat #zunit.
#zWhen #zmarginal #zutility #zexceeds # z marginal #zcost, #zand #z we #zcompare #zthe #ztwo, #zwe #zcan #zmake #zbetter
#zfinancial #zdecisions. #zAs #zan #zexample, #zif #zyou #zmust #zfly #zto #zsome #zdestination, #zis #zthe #zmarginal #zcost
#zof #zchecking #za #zbag #zusing #za #zcarry-on #z worth #zthe #zmarginal #zutility?
3. Describe #zand #zgive #zan #zexample #zof #zhow #zyour #zmarginal #zincome #ztax #zrate #zcan #zaffect
#zfinancial #zdecision #z making.
Answer: #zAs #zour #zincome #zrises, #zwe #zwill #zfind #zourselves #zin #zhigher #zand #zhigher #ztax #zbrackets. #zOne
#ztype #zof #zdecision #zthat #zis #zaffected #zby #zincome #ztaxes #zis #zhow #z we #zshould #zinvest #zfor #zretirement. #zWe
#zmight #zwant #zto #zinvest #zthrough #za #z401(k) #zplan #zinstead #zof #zkeeping #zour #zretirement #zmoney #zin #za
#zsavings #zaccount, #z which #zis #ztaxable.
Since #zmost #ztypes #zof #zincome #zare #ztaxable, #zit #zis #zimportant #zthat #zwe #zunderstand #zthe #zimpact #zof
#zincome #ztaxes #zon #zfinancial #zdecisions. #zOf #zparticular #zimportance #zis #zthe #zmarginal #ztax #zrate #z(the #ztax
#zrate #zat #zwhich #zour #zlast #zdollar #zearned #zis #ztaxed). #zIf #zwe #zare #zin #zthe #z25 #zpercent #zmarginal #ztax
#zbracket, #zwe #z will #zget #zto #zkeep #z75 #zpercent #z(100 #zpercent #zminus #z25 #zpercent) #zof #zour #zlast #ztaxable
#zdollar #zearned. #zIf #zthe #zincome #zis #ztax-free #zincome, #zon #zthe #zother #zhand, #z we #z would #zget #zto #zkeep #z100
#zpercent #zof #zit. #zTherefore, #zit #zis #zimportant #zto #zknow #zour #zmarginal #ztax #zrate #zas #zwell #zas #zwhat #ztypes
#zof #zincome #zare #zsubject #zto #zfederal #zincome #ztaxes. #zIt #zis #zalso #zimportant #zto #zremember #zthe #zimpact #zof
#zstate #zincome #ztaxes #zand #zSocial #zSecurity #ztaxes.
LO1.4 #zPerform #ztime #zvalue #zof #zmoney #zcalculations #zin #zpersonal #zfinancial #zdecision #zmaking.
1. What #zare #zthe #ztwo #zcommon #zquestions #zabout #zmoney?
Answer: #zThe #ztwo #zcommon #zquestions #zabout #zmoney #zare #zits #zfuture #zvalue #zand #zpresent #zvalue.
#zFuture #zvalue #zis #zwhat #zinvestment #zor #zseries #zof #zinvestments #z will #zbe #zat #za #zpoint #zin #zthe #zfuture.
#zPresent #zvalue #zis #zhow #z much #z we #z would #zneed #zto #zinvest #ztoday #zand/or #zin #za #zseries #zof #zfuture
#zinvestments #zto #zprovide #zsome #zamount #zin #zthe #zfuture.
2. Explain #zthe #zdifference #zbetween #zsimple #zinterest #zand #zcompound #zinterest, #zand #zdescribe
© #z2024 #zCengage. #zAll #zRights #zReserved. #zMay #znot #zbe #zscanned, #zcopied, #zor #zduplicated, #zor #zposted #zto #za 4
#zpublicly #zaccessible
website, #zin #zwhole #zor #zin #zpart.
Solution and Answer Guide
GARMAN/FOX, PERSONAL FINANCE 14E, CHAPTER 1: THINKING LIKE A FINANCIAL PLANNER
TABLE OF CONTENTS
Answers to Chapter Concept Checks ........................................................................................................ 2
What Do You Recommend Now? .............................................................................................................. 4
Let’s Talk About It...................................................................................................................................... 5
Do the Math ................................................................................................................................................. 6
Financial Planning Cases ............................................................................................................................ 8
Extended Learning .................................................................................................................................... 10
© 2024 Cengage. All Rights Reserved. May not be scanned, copied, or duplicated, or posted to a publicly accessible 1
website, in whole or in part.
, Solution #zand #zAnswer #zGuide: #zGarman/Fox, #zPersonal #zFinance #z14e, #zChapter #z1: #zThinking #zLike #za
#zFinancial #zPlanner
ANSWERS TO CHAPTER CONCEPT CHECKS
#Z #Z #Z #Z
LO1.1 #zRecognize #zthe #zkeys #zto #zachieving #zfinancial #zsuccess.
1. Explain #zthe #zfive #zsteps #zin #zthe #zfinancial #zplanning #zprocess.
Answer: #zThere #zare #zfive #zfundamental #zsteps #zto #zthe #zpersonal #zfinancial #zplanning #zprocess: #z(1)
#zevaluate #zyour #zfinancial #zhealth #zto #zyour #zeducation #zand #zcareer #zchoice; #z(2) #zdefine #zyour #zfinancial
#zgoals; #z(3) #zdevelop #za #zplan #zof #zaction #zto #zachieve #zyour #zgoals; #z(4) #zimplement #zspending #zand #zsaving
#zplans #zto #zmonitor #zand #zcontrol #zprogress #ztoward #zyour #zgoals; #zand #z(5) #zreview #zyour #zfinancial
#zprogress #zand #zmake #zchanges #zas #zappropriate.
2. Distinguish #zamong #zfinancial #zsuccess, #zfinancial #zsecurity, #zand #zfinancial #zhappiness.
Answer: #zFinancial #zsuccess #zis #zthe #zachievement #zof #zfinancial #zaspirations #zthat #zare #zdesired, #zplanned,
#zor #zattempted. #zSuccess #zis #zdefined #zby #zthe #zindividual #zor #zfamily #zthat #zseeks #zit. #zFinancial #zsuccess
#zmay #zbe #zdefined #zas #zbeing #zable #zto #zlive #zaccording #zto #zone’s #zstandard #zof #zliving. #zFinancial #zsecurity
#zis #zthat #zcomfortable #zfeeling #zthat #zyour #zfinancial #zresources #zwill #zbe #zadequate #zto #zfulfill #zany #zneeds
#zyou #zhave #zas #z well #zas #zyour #z wants. #zFinancial #zhappiness #zis #zthe #zexperience #zyou #zhave #z when #zyou
#zare #zsatisfied #zwith #z money #z matters. #zPeople #z who #zare #zhappy #zabout #ztheir #zfinances #z will #zsee #za
#zspillover #zinto #zpositive #zfeelings #zabout #zlife #zin #zgeneral.
3. Summarize #zwhat #zyou #zwill #zaccomplish #zstudying #zpersonal #zfinance.
Answer: #zSeveral #zthings #zcan #zbe #zaccomplished #zby #zstudying #zpersonal #zfinance. #zRecognize #zhow #zto
#zmanage #zunexpected #zand #zexpected #zfinancial #zevents. #zPay #zas #zlittle #zas #zpossible #zin #zincome #ztaxes.
#zUnderstand #zhow #zto #zeffectively #zcomparison #zshop #zfor #zvehicles #zand #zhomes. #zProtect #zwhat #zwe #zown.
#zInvest #zwisely. #zAccumulate #zand #zprotect #zthe #zwealth #zthat #zwe #zmay #zchoose #zto #zspend #zduring #zour #znon-
working #zyears #z(e.g., #zretirement) #zor #zdonate.
4. What #zare #zthe #zbuilding #zblocks #zto #zachieving #zfinancial #zsuccess?
Answer: #zThe #zbuilding #zblocks #zfor #zachieving #zfinancial #zsuccess #zinclude #za #zfoundation #zof #zregular
#zincome #zthat #zprovides #zthe #zmeans #zto #zsupport #zyour #zlifestyle #zand #zsave #zfor #zdesired #zgoals #zin #zthe
#zfuture. #zThe #zfoundation #zsupports #za #zbase #zof #zvarious #zbanking #zaccounts, #zinsurance #zprotection, #zand
#zemployee #zbenefits. #zThen #zwe #zcan #zestablish #zgoals, #za #zrecordkeeping #zsystem, #za #zbudget, #zand #zan
#zemergency #zsavings #zfund. #zWe #z will #zalso #zmanage #zvarious #zexpenses #zsuch #zas #zhousing, #ztransportation,
#zinsurance, #zand #zthe #zpayment #zof #ztaxes. #zWe #zwill #zalso #zneed #zto #zhandle #zcredit, #zsavings, #zand
#zeducational #zcosts. #zFinally, #zwe #zinvest #zin #zvarious #zinvestment #zalternatives #zsuch #zas #zmutual #zfunds,
#zstocks, #zand #zbonds, #zoften #zfor #zretirement. #zAs #za #zresult #zof #zall #zthese #zbuilding #zblocks, #zwe #zare #zmore
#zapt #zto #zhave #za #zfinancially #zsuccessful #zlife.
LO1.2 #zUnderstand #zhow #zthe #zeconomy #zaffects #zyour #zpersonal #zfinancial #zsuccess.
1. Summarize #zthe #zphases #zof #zthe #zbusiness #zcycle.
Answer: #zThe #zbusiness #zcycle #zentails #za #zwavelike #zpattern #zof #zrising #zand #zfalling #zeconomic #zactivity
#zas #zmeasured #zby #zeconomic #zindicators #zlike #zunemployment #zrates #zor #zthe #zgross #zdomestic #zproduct.
#zThe #zphases #zof #zthe #zbusiness #zcycle #zinclude #zexpansion #z(preferred #zstage—production #zis #zhigh,
#zunemployment #zlow, #zinterest #zrates #zlow #zor #zfalling, #zstock #zmarket #zand #zconsumer #zdemand #zhigh),
#zpeak, #zcontraction, #zdownturn, #ztrough, #zand #zrecovery.
2. Describe #ztwo #zstatistics #zthat #zhelp #zpredict #zthe #zfuture #zdirection #zof #zthe #zeconomy.
Answer: #zForecasting #zthe #zstate #zof #zthe #zeconomy #zinvolves #zpredicting, #zestimating, #zor #zcalculating
#z what #z will #zhappen #zin #zadvance. #zWe #zneed #zto #zbe #zable #zto #zforecast #zthe #zstate #zof #zthe #zeconomy,
© #z2024 #zCengage. #zAll #zRights #zReserved. #zMay #znot #zbe #zscanned, #zcopied, #zor #zduplicated, #zor #zposted #zto #za 2
#zpublicly #zaccessible
website, #zin #zwhole #zor #zin #zpart.
, Solution #zand #zAnswer #zGuide: #zGarman/Fox, #zPersonal #zFinance #z14e, #zChapter #z1: #zThinking #zLike #za
#zFinancial #zPlanner
#zinflation, #zand #zinterest #zrates #zso #zthat #zwe #zhave #zadvance #zwarning #zof #zthe #zdirections #zand #zstrength #zof
#zchanges #zin #zeconomic #ztrends #zsince #zthey #zwill #zaffect #zour #zpersonal #zfinances. #zTwo #zstatistics #zwe
#zcould #zwatch #zare #zthe #zconsumer #zconfidence #zindex #z(how #zconsumers #zfeel #zabout #zthe #zeconomy #zand
#ztheir #zpersonal #zfinances) #zand #zthe #zindex #zof #zleading #zeconomic #zindicators #z(composite #zindex,
#zaverages #zten #zcomponents #zof #zeconomic #zgrowth).
© #z2024 #zCengage. #zAll #zRights #zReserved. #zMay #znot #zbe #zscanned, #zcopied, #zor #zduplicated, #zor #zposted #zto #za 3
#zpublicly #zaccessible
website, #zin #zwhole #zor #zin #zpart.
, Solution #zand #zAnswer #zGuide: #zGarman/Fox, #zPersonal #zFinance #z14e, #zChapter #z1: #zThinking #zLike #za
#zFinancial #zPlanner
3. Give #zan #zexample #zof #zhow #zinflation #zaffects #zincome #zand #zconsumption.
Answer: #zInflation #zreduces #zthe #zpurchasing #zpower #zof #zthe #zdollar. #zThis #zmeans #zthat #zour #zincome
#z will #znot #zgo #zas #zfar #zand, #zthus, #zin #zreal #zterms #zwill #zbe #zlowered #zby #zinflation. #zBecause #zitems #zcost
#zmore, #z we #z will #zhave #zto #zconsume #zless #zand #zmay #zcut #zback #zon #zsome #zexpenditures #zto #zbe #zable #zto
#zafford #zthose #z with #za #zhigher #zpriority.
LO1.3 #zThink #zlike #zan #zeconomist #zwhen #zmaking #zfinancial #zdecisions.
1. Define #zopportunity #zcost #zand #zgive #zan #zexample #zof #zhow #zopportunity #zcosts #zmight #zaffect #zyour
#zfinancial #zdecision #zmaking.
Answer: #zThe #zopportunity #zcost #zof #za #zdecision #zis #zmeasured #zas #zthe #zvalue #zof #zthe #znext-best #zalternative
#zthat #zmust #zbe #zforgone. #zIf #zwe, #zfor #zexample, #zput #zour #zretirement #zsavings #zin #za #zregular #zsavings
#zaccount #zinstead #zof #zin #za #ztax- #zsheltered #zretirement #zaccount, #z we #z may #zbe #zforgoing #zthe #ztax #zbenefits
#zassociated #zwith #zinvesting #zin #zretirement #zaccounts #zsuch #zas #zIRAs #zor #z401(k) #zplans. #zIn #zanother
#zexample, #zif #zwe #zdecide #zto #zborrow #zthe #z maximum #zstudent #zloan #zamount #zfor #z which #zwe #zqualify #zto
#zlive #za #zbit #zmore #zcomfortably #z while #zin #zcollege, #zwe #z will #znot #zbe #zable #zto #zlive #zas #znicely, #zsave #zas
#zmuch #zfor #zthe #zdown #zpayment #zon #za #zhome #zor #zsave #zfor #zretirement #zonce #zwe #zgraduate #zbecause #zof
#zthe #zhigher #zloan #zpayments.
2. Explain #zand #zgive #zan #zexample #zof #zhow #zmarginal #zutility #zand #zmarginal #zcost #zmake #zsome
#zfinancial #zdecisions #zeasier.
Answer: #zMarginal #zanalysis #zfocuses #zon #zthe #znext #zincrement #zof #zusefulness #zor #zcost #zwhen #zmaking
#zfinancial #zdecisions. #zMarginal #zutility #zis #zthe #zextra #zsatisfaction #zderived #zfrom #zhaving #zone #zmore
#zincremental #zunit #zof #za #zproduct #zor #zservice. #zMarginal #zcost #zis #zthe #zadditional #zcost #zof #zthat #zunit.
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3. Describe #zand #zgive #zan #zexample #zof #zhow #zyour #zmarginal #zincome #ztax #zrate #zcan #zaffect
#zfinancial #zdecision #z making.
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#zmight #zwant #zto #zinvest #zthrough #za #z401(k) #zplan #zinstead #zof #zkeeping #zour #zretirement #zmoney #zin #za
#zsavings #zaccount, #z which #zis #ztaxable.
Since #zmost #ztypes #zof #zincome #zare #ztaxable, #zit #zis #zimportant #zthat #zwe #zunderstand #zthe #zimpact #zof
#zincome #ztaxes #zon #zfinancial #zdecisions. #zOf #zparticular #zimportance #zis #zthe #zmarginal #ztax #zrate #z(the #ztax
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#zof #zincome #zare #zsubject #zto #zfederal #zincome #ztaxes. #zIt #zis #zalso #zimportant #zto #zremember #zthe #zimpact #zof
#zstate #zincome #ztaxes #zand #zSocial #zSecurity #ztaxes.
LO1.4 #zPerform #ztime #zvalue #zof #zmoney #zcalculations #zin #zpersonal #zfinancial #zdecision #zmaking.
1. What #zare #zthe #ztwo #zcommon #zquestions #zabout #zmoney?
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#zFuture #zvalue #zis #zwhat #zinvestment #zor #zseries #zof #zinvestments #z will #zbe #zat #za #zpoint #zin #zthe #zfuture.
#zPresent #zvalue #zis #zhow #z much #z we #z would #zneed #zto #zinvest #ztoday #zand/or #zin #za #zseries #zof #zfuture
#zinvestments #zto #zprovide #zsome #zamount #zin #zthe #zfuture.
2. Explain #zthe #zdifference #zbetween #zsimple #zinterest #zand #zcompound #zinterest, #zand #zdescribe
© #z2024 #zCengage. #zAll #zRights #zReserved. #zMay #znot #zbe #zscanned, #zcopied, #zor #zduplicated, #zor #zposted #zto #za 4
#zpublicly #zaccessible
website, #zin #zwhole #zor #zin #zpart.
