CRPC EXAM PRACTICE EXAM ACTUAL EXAM 400 QUESTIONS AND
CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED
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?
A)$111,000
B)$137,000
C)$122,000
D)$263,000 - (Correct answer) - C
At the end of last year, Bill Greer has the following financial information:
Salaries$70,000Auto payments$5,000Insurance
payments$3,800Food$8,000Credit card
balance$10,000Dividends$1,100Utilities$3,500Mortgage
,payments$14,000Taxes$13,000Clothing$9,000Interest
income$2,100Checking account$4,000Vacations$8,400Donations$5,800
What is the cash flow surplus or (deficit) for Bill?
A)
$2,700
B)
$6,500
C)
$10,700
D)
($500) - (Correct answer) - A
Which of the following are correct statements about income replacement
percentages?
I.Income replacement percentages are typically much higher for those with
higher preretirement incomes.
II.Income replacement percentages vary between low-income and high-
income retirees.
,III.Income replacement ratios should not be used as the only basis for
planning.
IV.Income replacement ratios are useful for younger clients as a guide to
their long-range planning and investing.
A)
I and IV
B)
I and II
C)
II and III
D)
II, III, and IV - (Correct answer) - D
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?
A)
, $55,692
B)
$31,621
C)
$29,552
D)
$54,130 - (Correct answer) - B
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?
A)
$931,241
CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED
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?
A)$111,000
B)$137,000
C)$122,000
D)$263,000 - (Correct answer) - C
At the end of last year, Bill Greer has the following financial information:
Salaries$70,000Auto payments$5,000Insurance
payments$3,800Food$8,000Credit card
balance$10,000Dividends$1,100Utilities$3,500Mortgage
,payments$14,000Taxes$13,000Clothing$9,000Interest
income$2,100Checking account$4,000Vacations$8,400Donations$5,800
What is the cash flow surplus or (deficit) for Bill?
A)
$2,700
B)
$6,500
C)
$10,700
D)
($500) - (Correct answer) - A
Which of the following are correct statements about income replacement
percentages?
I.Income replacement percentages are typically much higher for those with
higher preretirement incomes.
II.Income replacement percentages vary between low-income and high-
income retirees.
,III.Income replacement ratios should not be used as the only basis for
planning.
IV.Income replacement ratios are useful for younger clients as a guide to
their long-range planning and investing.
A)
I and IV
B)
I and II
C)
II and III
D)
II, III, and IV - (Correct answer) - D
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?
A)
, $55,692
B)
$31,621
C)
$29,552
D)
$54,130 - (Correct answer) - B
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?
A)
$931,241
