Chapter Assignments

Jaquida Pittman
March 30, 2010
Chapter 14 Assignments
FIN 101
Kathy Ashman

Personal Finance in Practice

Year 1= (2500*10% = 250) 250 + 2500 = 2750
        2 = (2750+2500 = 5250 x 10%=525) 525 + 5250 = 5775
        3 = (5775+2500 = 8275 * 10%= 828) 828+ 8275 = 9103
        4 = (9103+2500 = 11603 * 10%= 1160) 1160 + 11603 =12763
        5 = (12763+2500 = 15263 * 10%= 1526) 1526 + 15263 = 16789
        6 = (16789+2500 = 19289 * 10%= 1929) 1929 + 19289 = 21218
        7 = (21218+2500 = 23718 *10%= 2372) 2372 + 23718 = 26090
        8 = (26090+2500 = 28590 *10%= 2859) 2859 + 28590 = 31449
        9 = (31449+2500 = 33949 *10%= 3395) 3395 + 33949 = 37344
      10 = (37344+2500 = 39844 *10%= 3984) 3984 + 39844 = 43828
      Most of the answers starting with the third year are rounded.

Problems

  1.   Total Assets   $108,800
      -_ Total Liabilities $16,300
                Net Worth         $92,500

  3.         Total Assets $427,000
      - Total Liabilities $111,000
        Net Worth         $316,000

  6. a) 40 years = $5,000 * 21.725( 40 year interest @ 8%)     $108,625
            Social Security payments $15,000 * 40 years                 $600,000
            + Amount in IRA account                                                   $     5,000
          Janine’s IRA will be worth                                             $713,625

    b) Janine would have to accumulate $161,375 in her company’s 401(k) plan
          in order to reach her retirement income goal.

    8. You would have to withdrawal $340 a month to reduce this nest egg to zero in
          in 20 years

        You can withdrawal $230 per month for as long as you live and still leave this
          nest egg intact.

Question

  1. I would probably spend
      4% Other expenses
      5% Personal insurance and pensions
      4% Entertainment
      2% Contribution
      8% Clothing and personal care
      14% Medical care
      14% Food...