CRPC FINAL EXAM CRPC PRACTICE EXAM [4 LATEST
VERSIONS 2025 UPDATE] QUESTIONS WITH 100%
CORRECT VERIFIED ANSWERS
Cindy wants to have an annual retirement income of $50,000 protected against 3% inflation. Assuming
an 8% after-tax rate of return and a retirement period of 25 years, how much money does Cindy need in
order to provide the inflation-protected $50,000 at the beginning of each retirement year? - ANSWER -
BEG Mode
# of Periods (1 P/YR in this example)
C ALL
50000, PMT
4.8544, I/YR [(1.08 ÷ 1.03) - 1] × 100 = 4.8544 I/YR
25, N
PV
Solution: $749,812.61
Frank will retire in 14 years, and he needs to save an additional $380,000 to provide the retirement
income that he wants. Assume that inflation is 4% and after-tax earnings are 10%. How much will Frank
need to save at the end of each year to reach his goal? - ANSWER - END Mode
# of Periods (1 P/YR in this example)
pg. 1
,C ALL
380000, FV
10, I/YR
14, N
PMT
Solution: $13,583.56 (The answer is actually -$13,583.56, as this represents an outflow to savings.)
In this case, we do not need to make the inflation adjustment. This problem asks how much Frank needs
to save at the end of each year, so the savings will be level. Remember, when the payment is level, the
pg. 2
,inflation adjustment is not called for. Inflation should have already been taken into account to calculate
the need for an additional $380,000.
Dan and Barbara have saved $850,000. Assume that inflation is 3% and after-tax earnings are 9%. Also
assume that their retirement will last 26 years. How much annual retirement income, protected against
inflation, can the $850,000 provide for 26 years with payments made at the beginning of each year? -
ANSWER - BEG Mode
# of Periods (1 P/YR in this example)
C ALL
850000, PV
5.8252, I/YR [(1.09 ÷ 1.03) - 1] × 100 = 5.8252 I/YR
26, N
PMT
Solution: $60,721.17
The Smiths are a 50-year-old couple with an annual retirement budget of $75,000 (in today's dollars).
They want to plan for a retirement life expectancy of 25 years (starting at age 65), and assume a 3.5%
average inflation rate and a 7% long-term rate of return. How much money will they need at age 65 to
fund their retirement? - ANSWER - Step #1: Find the inflated value of $75,000 in 15 years # of Periods (1
P/YR in this example)
C ALL
75000, PV
3.5, I/YR
15, N
FV
Solution: $125,651.16 (This becomes our starting income payment in Step #2.)
Step #2: Calculate the PVAD of 25 years of payments, using a first payment amount of $125,651, and
factoring both inflation (3.5%) and the rate of return (7%) (i.e., a serial payment).
BEG Mode
# of Periods (1 P/YR in this example)
C ALL
125651, PMT
pg. B3
, 3.3816, BI/YR B[(1.07 B÷ B1.035) B- B1] B× B100 B= B3.3816 BI/YR
25, BN
B PV
Solution: B$2,168,715.58
John BBennett Bwants Bto Breceive Bthe Bequivalent Bof B$40,000 Bin Btoday's Bdollars Bat Bthe Bbeginning Bof Beach
Byear Bfor Bthe Bnext Bnine Byears. BHe Bassumes Bthat Binflation Bwill Baverage B5% Bover Bthe Blong Brun Band Bthat
Bhe Bcan Bearn Ba B10% Bcompound Bannual Bafter-tax Breturn Bon Binvestments.
What Blump Bsum Bdoes BJohn Bneed Bto Binvest Btoday Bto Bfund Bhis Bneeds? B- BANSWER B- BBEG BMode# Bof
BPeriods B(1 BP/YR Bin Bthis Bexample)
C BALL
B 40000,
PMT
B
9, BN
4.7619, BI/YR B[(1.10 B÷ B1.05) B- B1] Bx B100 B=
4.7619 BPV
B
Solution: B$301,035.15
Karen BTroy, Bage B51, Bwants Bto Bquit Bworking Bin Bsix Byears. BIn Bterms Bof Btoday's Bdollars, Bshe Bneeds Ban Badditional
$400,000 Bin Bsix Byears Bto Bhave Bsufficient Bfunds Bto Bfinance Bthis Bgoal. BShe Bassumes Bthat Binflation Bwill
Baverage B5% Bover Bthe Blong Brun Band Bthat Bshe Bcan Bearn Ban B8% Bcompound Bannual Bafter-tax Breturn Bon
Binvestments.
What Bserial Bpayment Bshould BKaren Binvest Bat Bthe Bend Bof Bthe Bfirst Byear Bto Bfund Bthis Bgoal? B- BANSWER B-
BEND BMode
# Bof BPeriods B(1 BP/YR, Bin Bthis
example) BC BALL
B
400000, BFV
6, BN
2.8571,
I/YR B[(1.08 B÷ B1.05) B- B1] Bx B100 B= B2.8571 BI/YR
B PMT B= B$62,061.19X B1.05= B$65,164.25
Solution: B$65,164.25 B(This Banswer Bis Bactually B-$65,164.25 Bas Bit Brepresents Ban Boutflow Bto Bsavings.)
pg. B4
VERSIONS 2025 UPDATE] QUESTIONS WITH 100%
CORRECT VERIFIED ANSWERS
Cindy wants to have an annual retirement income of $50,000 protected against 3% inflation. Assuming
an 8% after-tax rate of return and a retirement period of 25 years, how much money does Cindy need in
order to provide the inflation-protected $50,000 at the beginning of each retirement year? - ANSWER -
BEG Mode
# of Periods (1 P/YR in this example)
C ALL
50000, PMT
4.8544, I/YR [(1.08 ÷ 1.03) - 1] × 100 = 4.8544 I/YR
25, N
PV
Solution: $749,812.61
Frank will retire in 14 years, and he needs to save an additional $380,000 to provide the retirement
income that he wants. Assume that inflation is 4% and after-tax earnings are 10%. How much will Frank
need to save at the end of each year to reach his goal? - ANSWER - END Mode
# of Periods (1 P/YR in this example)
pg. 1
,C ALL
380000, FV
10, I/YR
14, N
PMT
Solution: $13,583.56 (The answer is actually -$13,583.56, as this represents an outflow to savings.)
In this case, we do not need to make the inflation adjustment. This problem asks how much Frank needs
to save at the end of each year, so the savings will be level. Remember, when the payment is level, the
pg. 2
,inflation adjustment is not called for. Inflation should have already been taken into account to calculate
the need for an additional $380,000.
Dan and Barbara have saved $850,000. Assume that inflation is 3% and after-tax earnings are 9%. Also
assume that their retirement will last 26 years. How much annual retirement income, protected against
inflation, can the $850,000 provide for 26 years with payments made at the beginning of each year? -
ANSWER - BEG Mode
# of Periods (1 P/YR in this example)
C ALL
850000, PV
5.8252, I/YR [(1.09 ÷ 1.03) - 1] × 100 = 5.8252 I/YR
26, N
PMT
Solution: $60,721.17
The Smiths are a 50-year-old couple with an annual retirement budget of $75,000 (in today's dollars).
They want to plan for a retirement life expectancy of 25 years (starting at age 65), and assume a 3.5%
average inflation rate and a 7% long-term rate of return. How much money will they need at age 65 to
fund their retirement? - ANSWER - Step #1: Find the inflated value of $75,000 in 15 years # of Periods (1
P/YR in this example)
C ALL
75000, PV
3.5, I/YR
15, N
FV
Solution: $125,651.16 (This becomes our starting income payment in Step #2.)
Step #2: Calculate the PVAD of 25 years of payments, using a first payment amount of $125,651, and
factoring both inflation (3.5%) and the rate of return (7%) (i.e., a serial payment).
BEG Mode
# of Periods (1 P/YR in this example)
C ALL
125651, PMT
pg. B3
, 3.3816, BI/YR B[(1.07 B÷ B1.035) B- B1] B× B100 B= B3.3816 BI/YR
25, BN
B PV
Solution: B$2,168,715.58
John BBennett Bwants Bto Breceive Bthe Bequivalent Bof B$40,000 Bin Btoday's Bdollars Bat Bthe Bbeginning Bof Beach
Byear Bfor Bthe Bnext Bnine Byears. BHe Bassumes Bthat Binflation Bwill Baverage B5% Bover Bthe Blong Brun Band Bthat
Bhe Bcan Bearn Ba B10% Bcompound Bannual Bafter-tax Breturn Bon Binvestments.
What Blump Bsum Bdoes BJohn Bneed Bto Binvest Btoday Bto Bfund Bhis Bneeds? B- BANSWER B- BBEG BMode# Bof
BPeriods B(1 BP/YR Bin Bthis Bexample)
C BALL
B 40000,
PMT
B
9, BN
4.7619, BI/YR B[(1.10 B÷ B1.05) B- B1] Bx B100 B=
4.7619 BPV
B
Solution: B$301,035.15
Karen BTroy, Bage B51, Bwants Bto Bquit Bworking Bin Bsix Byears. BIn Bterms Bof Btoday's Bdollars, Bshe Bneeds Ban Badditional
$400,000 Bin Bsix Byears Bto Bhave Bsufficient Bfunds Bto Bfinance Bthis Bgoal. BShe Bassumes Bthat Binflation Bwill
Baverage B5% Bover Bthe Blong Brun Band Bthat Bshe Bcan Bearn Ban B8% Bcompound Bannual Bafter-tax Breturn Bon
Binvestments.
What Bserial Bpayment Bshould BKaren Binvest Bat Bthe Bend Bof Bthe Bfirst Byear Bto Bfund Bthis Bgoal? B- BANSWER B-
BEND BMode
# Bof BPeriods B(1 BP/YR, Bin Bthis
example) BC BALL
B
400000, BFV
6, BN
2.8571,
I/YR B[(1.08 B÷ B1.05) B- B1] Bx B100 B= B2.8571 BI/YR
B PMT B= B$62,061.19X B1.05= B$65,164.25
Solution: B$65,164.25 B(This Banswer Bis Bactually B-$65,164.25 Bas Bit Brepresents Ban Boutflow Bto Bsavings.)
pg. B4
