- (TCO A) Rose and John have liquid assets of $5,000 and other assets of $50,000. Their total liabilities equal $26,000. What is their net worth? (Show all work.)
- (TCO A) Construct a balance sheet from the following information. Be sure the format is correct. (Show all work.)
Cash on hand $75
Bank credit card balance 1,200
Utility bill (over due) 100
Auto loan balance 3,500
Primary residence 105,000
Coin collection 2,500
2001 Toyota 7,500
- (TCO A) The following questions are worth 5 points each. Please show all work.
a. Inflation is expected to average 4% for the long term and Mr. Smith earned $50,000 this year. How much must he earn in 20 years just to keep up with inflation and maintain the balance between his income and his increasing expenditures?
- b. Jamie wants to have $2,000,000 for her retirement in 25 years. How much should she save annually if she thinks she can earn 10% on her investments?
- c. The Flemings will need $100,000 annually for 20 years during retirement. How much will they need at retirement if they can earn a 4% rate of return?
- d. The Hamptons want to have $3,500,000 for their retirement in 30 years. How much should they save annually if they think they can earn 8% on their investments?
- (TCO B) From the information given below, determine Steve's gross income for tax purposes.
Interest (checking account) $25
Cash received as birthday gift $1,000
Dividends (mutual funds) $5,500
Child support payments received from ex-wife $24,000
Life insurance benefits received from aunt's death $50,000
- (TCO B) Mary has the following expenses that she wants to include as itemized deductions for the year. Her adjusted gross income is $80,000. What is the total itemized deduction she can take? (Show all work.)
Medical expenses $4,500
- Home mortgage interest 8,000
- Credit card interest 450
- Charitable contributions 1,500
- State property taxes 2,400
- Job-related expenses 1,900
- (TCO C) Maggie wants to open a checking account that will be the least expensive given her normal financial transactions. She typically writes 15 checks a month and uses an ATM 35 times a month. Her minimum checking balance falls to about $350 in an average month. Which of the following accounts would be least expensive for Maggie? (Show all your work.)
No monthly fee is charged if a minimum balance of at least $300 is maintained.
A $5.00 fee is charged in any month the minimum balance falls below $300.
An ATM fee of $0.10 per transaction is charged on all transactions.
No monthly fee is charged if a minimum balance of at least $500 is maintained.
A $3.00 fee plus $0.10/check is charged in any month the minimum balance falls below $500. There is no ATM fee on transactions.
- (TCO C) Greg has negotiated a $20,000 price on a new pick-up truck. The manufacturer is offering a $1,500 rebate, or 3.9%, three-year financing. Greg is also able to get 7%, three-year financing at his credit union. If Greg plans to finance $18,000 over three years, should he take the rebate or the 3.9% financing? (Show all work.)
- TCO C) On September 8 Maggie lost her wallet. The following four credit cards were in it, and the following charges were made before she was able to report the cards missing. How much is she legally responsible for?
Visa card $195
American Express $500
- (TCO C) Joe is purchasing a new truck for $30,000. Joe is making a $2,000 down payment, and he will make 60 monthly payments of $541 each. What are the total finance costs on this loan?