Solution Manual for Focus on Personal Finance 7th Edition Kapoor – Complete Answer Key (Chapters 1-14) & Continuing Case Studies

SOLUTIONV MANUALV FOR
FocusVonVPersonalVFinance,V7thVEdition
ChapterV1-14

ChapterV1

(Note:VSomeVofVtheseVproblemsVrequireVtheVuseVofVtheVtimeVvalueVofVmoneyVtablesVinVtheV
chapterVappendix,VaVfinancialVcalculator,VorVspreadsheetVsoftware.)

1. UsingVtheVruleVofV72,VapproximateVtheVfollowingVamounts.V (LOV1.1)

a. IfVtheVvalueVofVlandVinVanVareaVisVincreasingV6VpercentVaVyear,VhowVlongVwillVitVtakeVforV
propertyVvaluesVtoVdouble?

AboutV12VyearsV(72V/V6)

b. IfVyouVearnV10VpercentVonVyourVinvestments,VhowVlongVwillVitVtakeVforVyourVmoneyVtoV double?

AboutV7.2VyearsV(72V/V10)

c. AtVanVannualVinterestVrateVofV5Vpercent,VhowVlongVwillVitVtakeVforVyourVsavingsVtoVdouble?

AboutV14.4VyearsV(72V/V5)


2. InV2019,VselectedVautomobilesVhadVanVaverageVcostVofV$16,000.VTheVaverageVcostVofVthose
VsameVautomobilesVisVnowV$20,000.VWhatVwasVtheVrateVofVincreaseVforVtheseVautomobilesVbet
weenVtheVtwoVtimeVperiods?V(LOV1.1)

($20,000V-V$16,000)V/V$16,000V=V.25V(25Vpercent)


3. AVfamilyVspendsV$46,000VaVyearVforVlivingVexpenses.VIfVpricesVincreaseVbyV3VpercentVaVyearV
forVtheVnextVthreeVyears,VwhatVamountVwillVtheVfamilyVneedVforVtheirVlivingVexpensesVafterVthree
Vyears?V(LOV1.1)


46,000V V 1.09V=V$50,140;VorVusingVExhibitV1-A:V$46,000V V 1.093V=V$50,278


4. BenVCollinsVplansVtoVbuyVaVhouseVforV$260,000.VIfVtheVrealVestateVinVhisVareaVisVexpectedVtoVi
ncreaseVinVvalueVbyV2VpercentVeachVyear,VwhatVwillVitsVapproximateVvalueVbeVsevenVyearsVfromV
now?V(LOV1.1)

$260,000V V 1.149V=V$298,740;VorVusingVExhibitV1-A:V$260,000V V 1.149V=V$298,740


5. WhatVwouldVbeVtheVyearlyVearningsVforVaVpersonVwithV$9,000VinVsavingsVatVanVannualVinterestVrate
CopyrightV©V2020VMcGraw-
HillVEducation.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwrittenVconsentVofVMcGraw-Hill
Education.

, Vof
1.5Vpercent?V(LOV1.3)




CopyrightV©V2020VMcGraw-
HillVEducation.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwrittenVconsentVofVMcGraw-Hill
Education.

, $9,000V V 0.015V=V$135


6. UsingVtimeVvalueVofVmoneyVtablesV(ExhibitV1–
3VorVchapterVappendixVtables),VcalculateVtheVfollowing.V(LOV1.3)

a. TheVfutureVvalueVofV$550VsixVyearsVfromVnowVatV7Vpercent.
$550V V 1.501V=V$825.55V(ExhibitV1-A)


b. TheVfutureVvalueVofV$900VsavedVeachVyearVforV10VyearsVatV8Vpercent.
$900V V 14.487V=V$13,038.30V(ExhibitV1-B)

c. TheVamountVaVpersonVwouldVhaveVtoVdepositVtodayV(presentVvalue)VatVaV5VpercentVinterestV
rateVtoVhaveV$1,000VfiveVyearsVfromVnow.
$1,000V V 0.784V=V$784V(ExhibitV1-C)

d. TheVamountVaVpersonVwouldVhaveVtoVdepositVtodayVtoVbeVableVtoVtakeVoutV$500VaVyearVforV1
0VyearsVfromVanVaccountVearningV8Vpercent.
$500V V 6.710V=V$3,355V(ExhibitV1-D)


7. IfVyouVdesireVtoVhaveV$12,000VforVaVdownVpaymentVforVaVhouseVinVfiveVyears,VwhatVamount
VwouldVyouVneedVtoVdepositVtoday?VAssumeVthatVyourVmoneyVwillVearnV4Vpercent.V(LOV1.3)


$12,000V V 0.822V=V$9,864V(ExhibitV1-C)


8. PeteVMortonVisVplanningVtoVgoVtoVgraduateVschoolVinVaVprogramVofVstudyVthatVwillVtakeVthreeV
years.VPeteVwantsVtoVhaveV$8,000VavailableVeachVyearVforVvariousVschoolVandVlivingVexpenses.V
IfVheVearnsV3VpercentVonVhisVmoney,VhowVmuchVmustVheVdepositVatVtheVstartVofVhisVstudiesVtoV
beVableVtoVwithdraw
$8,000VaVyearVforVthreeVyears?V(LOV1.3)

$8,000V V 2.829V=V$22,632V(ExhibitV1-D)


9. CarlaVLopezVdepositsV$2,800VaVyearVintoVherVretirementVaccount.VIfVtheseVfundsVhaveVanVav
erageVearningVofV7VpercentVoverVtheV40VyearsVuntilVherVretirement,VwhatVwillVbeVtheVvalueVofV
herVretirementVaccount?V(LOV1.3)

$2,800V V 199.635V=V$558,978V(ExhibitV1-B)


10. IfVaVpersonVspendsV$10VaVweekVonVcoffeeV(assumeV$500VaVyear),VwhatVwouldVbeVtheVfutureV
valueVofVthatVamountVoverV10VyearsVifVtheVfundsVwereVdepositedVinVanVaccountVearningV3Vpercent
?V(LOV1.3)

CopyrightV©V2020VMcGraw-
HillVEducation.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwrittenVconsentVofVMcGraw-Hill
Education.

, $500V V 11.464V=V$5,732V(ExhibitV1-B)




CopyrightV©V2020VMcGraw-
HillVEducation.VAllVrightsVreserved.VNoVreproductionVorVdistributionVwithoutVtheVpriorVwrittenVconsentVofVMcGraw-Hill
Education.