CRPC Practice Exam 1 Exam comprehensive
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Terms in this set (89)
Mary Goodwin's financial $122,000
situation is as follows:
Cash/cash Assets = $263,000; liabilities = $141,000, so net worth is
equivalents$15,000S $122,000. Taxes and auto note payments appear on
hort-term debts$8,000 the cash flow statement.
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?
,For the year ending $2,700
December 31, XXXX, Bill
Greer has the following Income = $70,000 + $1,100 + $2,100 = $73,200.
financial information: Expenses = $5,000 + $3,800 + $8,000 + $3,500 +
Salaries$70,000Auto $14,000 + $13,000 + $9,000 + $8,400 + $5,800 =
payments$5,000Insurance $70,500, so there is a surplus of $2,700. The checking
$3,800Food$8,000Credit account and credit card balances would be on the
card statement of financial position.
balance$10,000Dividends$
1,100Utilities$3,500Mortga
ge
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?
II, III, and IV
Which of the following are
correct statements about
The inverse of Option I is true. Those with a lower
income replacement
preretirement income typically need a much higher
percentages?
income replacement percentage in retirement.
If Tom and Jenny want to $31,621
save a fixed amount
annually to accumulate $2 Set calculator "End" and "1 P/Yr" Inputs: FV = 2000000,
million by their retirement i = 7, N = 25, PV = 0, then Pmt = $31,621
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?
,Bill and Lisa Hahn have $389,957
determined that they will
need a monthly income of The monthly retirement income need is not specified
$6,000 during retirement. as "today's dollars," and no inflation rate specified;
They expect to receive therefore, it must be assumed that the $2,500 net
Social Security retirement monthly income need represents retirement dollars,
benefits amounting to and the retirement period income stream is level. To
$3,500 per month at the calculate the lump sum needed at the beginning of
beginning of each month. retirement, discount the stream of monthly income
Over the 12 remaining payments at the investment return rate:
years of their 10BII+ PVAD calculation:
preretirement period, they Set calculator on BEG and 12 periods per year, then
expect to generate an input the following:
average annual after-tax 2,500 [PMT]
investment return of 8%; 25 [SHIFT] [N]
during their 25-year 6 [I/YR]
retirement period, they 0 [FV]
want to assume a 6% Solve for PV = $389,957
annual after-tax
investment return
compounded monthly.
What is the lump sum
needed at the beginning
of retirement to fund this
income stream?
, Chris and Eve Bronson $4,911,256
have analyzed their
current living expenses This PVAD calculation requires that the calculator be
and estimated their set for beginning-of-period payments. First, the
retirement income need, annual retirement income deficit is expressed in
net of expected Social retirement-year-one dollars, resulting in a $239,925
Security benefits, to be income deficit in the first retirement year. This income
$90,000 in today's dollars. deficit grows with inflation over the 30-year
They are confident that retirement period, and the retirement fund earns a 7%
they can earn a 7% after- return. The calculator inputs are $239,925, [PMT]; 30,
tax return on their [N]; 2.8846, [I/YR]. Solve for [PV], to determine the
investments, and they retirement fund that will generate this income stream.
expect inflation to If you enter 2.8846 directly into the calculator, you will
average 4% over the long get $4,911,265. If you use the equation to compute
term. I/YR, and then hit the I/YR button you will get
Determine the lump sum $4,911,256. Either way the answer is clear. The
amount the Bronsons will difference is that when you calculate the I/YR, the
need at the beginning of calculator takes the interest rate out to nine decimal
retirement to fund their places. If you enter in the 2.8846, then the calculator
retirement income needs, only takes the interest rate to four decimal places.
using the worksheet
below.
(1) Adjust income deficit
for inflation over the
preretirement period:$
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
questions | FREQUENTLY MOST TESTED
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Terms in this set (89)
Mary Goodwin's financial $122,000
situation is as follows:
Cash/cash Assets = $263,000; liabilities = $141,000, so net worth is
equivalents$15,000S $122,000. Taxes and auto note payments appear on
hort-term debts$8,000 the cash flow statement.
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?
,For the year ending $2,700
December 31, XXXX, Bill
Greer has the following Income = $70,000 + $1,100 + $2,100 = $73,200.
financial information: Expenses = $5,000 + $3,800 + $8,000 + $3,500 +
Salaries$70,000Auto $14,000 + $13,000 + $9,000 + $8,400 + $5,800 =
payments$5,000Insurance $70,500, so there is a surplus of $2,700. The checking
$3,800Food$8,000Credit account and credit card balances would be on the
card statement of financial position.
balance$10,000Dividends$
1,100Utilities$3,500Mortga
ge
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?
II, III, and IV
Which of the following are
correct statements about
The inverse of Option I is true. Those with a lower
income replacement
preretirement income typically need a much higher
percentages?
income replacement percentage in retirement.
If Tom and Jenny want to $31,621
save a fixed amount
annually to accumulate $2 Set calculator "End" and "1 P/Yr" Inputs: FV = 2000000,
million by their retirement i = 7, N = 25, PV = 0, then Pmt = $31,621
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?
,Bill and Lisa Hahn have $389,957
determined that they will
need a monthly income of The monthly retirement income need is not specified
$6,000 during retirement. as "today's dollars," and no inflation rate specified;
They expect to receive therefore, it must be assumed that the $2,500 net
Social Security retirement monthly income need represents retirement dollars,
benefits amounting to and the retirement period income stream is level. To
$3,500 per month at the calculate the lump sum needed at the beginning of
beginning of each month. retirement, discount the stream of monthly income
Over the 12 remaining payments at the investment return rate:
years of their 10BII+ PVAD calculation:
preretirement period, they Set calculator on BEG and 12 periods per year, then
expect to generate an input the following:
average annual after-tax 2,500 [PMT]
investment return of 8%; 25 [SHIFT] [N]
during their 25-year 6 [I/YR]
retirement period, they 0 [FV]
want to assume a 6% Solve for PV = $389,957
annual after-tax
investment return
compounded monthly.
What is the lump sum
needed at the beginning
of retirement to fund this
income stream?
, Chris and Eve Bronson $4,911,256
have analyzed their
current living expenses This PVAD calculation requires that the calculator be
and estimated their set for beginning-of-period payments. First, the
retirement income need, annual retirement income deficit is expressed in
net of expected Social retirement-year-one dollars, resulting in a $239,925
Security benefits, to be income deficit in the first retirement year. This income
$90,000 in today's dollars. deficit grows with inflation over the 30-year
They are confident that retirement period, and the retirement fund earns a 7%
they can earn a 7% after- return. The calculator inputs are $239,925, [PMT]; 30,
tax return on their [N]; 2.8846, [I/YR]. Solve for [PV], to determine the
investments, and they retirement fund that will generate this income stream.
expect inflation to If you enter 2.8846 directly into the calculator, you will
average 4% over the long get $4,911,265. If you use the equation to compute
term. I/YR, and then hit the I/YR button you will get
Determine the lump sum $4,911,256. Either way the answer is clear. The
amount the Bronsons will difference is that when you calculate the I/YR, the
need at the beginning of calculator takes the interest rate out to nine decimal
retirement to fund their places. If you enter in the 2.8846, then the calculator
retirement income needs, only takes the interest rate to four decimal places.
using the worksheet
below.
(1) Adjust income deficit
for inflation over the
preretirement period:$
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
