- Premium Academic Help From Professionals
- +1 323 471 4575
- support@contentexpertsagencies.com

Use of The *Time* *Value* *of* *Money* Tables

Chapter #1

PROBLEMS (p. 24-25)

(Note: Some of these problems require the use of the *Time* *Value* *of* *Money* Tables in the Chapter 1 Appendix, pp. 40-43).

- Using the rule of 72, approximate the following amounts.
- If the value of land in an area is increasing 6 percent a year, how long will it take for property values to double?
- b
*.*If you earn 10 percent on your investments, how long will it take for your money to double? - c
*.*At an annual interest rate of 5 percent, how long will it take for your savings to double? - In 2013, selected automobiles had an average cost of $16,000. The average cost of those same automobiles is now $20,000. What was the rate of increase for these automobiles between the two time periods?
- A family spends $46,000 a year for living expenses. If prices increase by 3 percent a year for the next three years, what amount will the family need for their living expenses after three years?
- Ben Collins plans to buy a house for $220,000. If that real estate is expected to increase in value by 2 percent each year, what will its approximate value be seven years from now?
- What would be the yearly earnings for a person with $8,000 in savings at an annual interest rate of 1.5 percent?
- Using time value of money tables (Exhibit 1-3 or Chapter Appendix tables-Pages 40-43), calculate the following:
- The future value of $550 six years from now at 7 percent.
- The future value of $700 saved each year for 10 years at 8 percent.
- The amount that a person would have to deposit today (present value) at a 5 percent interest rate in order to have $1,000 five years from now.
- The amount that a person would have to deposit today in order to be able to take out $500 a year for 10 years from an account earning 8 percent.

- If you desire to have $10,000 for a down payment for a house in five years, what amount would you need to deposit today? Assume that your money will earn 4 percent.
- Pete Morton is planning to go to graduate school in a program of study that will take three years. Pete wants to have $8,000 available each year for various school and living expenses. If he earns 3 percent on his money, how much must be deposit at the start of his studies to be able to withdraw $8,000 a year for three years?
- Carla Lopez deposits $3,000 a year into her retirement account. If these funds have an average earning of 7 percent over the 40 years until her retirement, what will be the value of her retirement account?
- If a person spends $10 a week on coffee (assume $500 a year), what would be the future value of that amount over ten years if the funds were deposited in an account earning 3 percent?

Chapter #2

PROBLEMS (p. 65-66)

- Based on the following data, determine the amount of total assets, total liabilities, and net worth.

Liquid assets, $3,870 Investment assets, $8,340

Current liabilities, $2,670 Household assets, $87,890

Long-term liabilities, $76,230

- Total assets
- Total liabilities
- Net worth

- Using the following balance sheet items and amounts, calculate the total liquid assets and total current liabilities: Money market account $2,600 Medical bills $262

Mortgage $158,000 Checking account $780

Retirement account $87,400 Credit card balance $489

- Total liquid assets
**Total****current****liabilities**

- Use the following items to determine the total assets, total liabilities, net worth, total cash inflows, and total cash outflows.

Rent for the month, $650 Monthly take-home salary, $2,185

Spending for food, $345 Cash in checking account, $450

Savings account balance, $1,890 Balance of educational loan, $2,160

Current value of automobile, $8,800 Telephone bill paid for month, $65

Credit card balance, $235 Loan payment, $80

Auto insurance, $230 Household possessions, $3,400

Video equipment, $2,350 Payment for electricity, $90

Lunches/parking at work, $180 Donations, $160

Personal computer, $1,200 Value of stock investment, $860

Clothing purchase, $110 Restaurant spending, $130

- Total assets =
**Total****liabilities****=**- Net worth =
**Total****cash****inflows****=**- Total cash outflows =

- For each of the following situations, compute the missing amount.

- Assets $65,000; liabilities $18,000; net worth=??

- Assets $86,500; liabilities=?? net worth $18,700.

- Assets $34,280; liabilities $12,965; net worth=??

- Assets=?? liabilities $38,345; net worth $52,654

- Based on this financial data, calculate the ratios requested: (Page 51) Liabilities $7,800 Net worth $58,000

Liquid assets $4,600 Current liabilities $1,300

Monthly credit payments $640 Take-home pay $2,575

Monthly savings $130 Gross income $2,850

- Debt ratio
- Current ratio
**Debt-payments****ratio****Savings ratio**

- Fran Powers created the following budget and reported the actual spending listed. Calculate the variance for each of these categories, and indicate whether it was a
*deficit*or a*surplus.*

Item Budgeted Actual Variance Deficit/Surplus

Food $360 $298

Transportation 320 334

Housing 950 982

Clothing 110 134

Personal 275 231

Note: A deficit in one category means that another category will have to make up the difference.

Chapter #3

PROBLEMS (p.100-101)

- If Samantha Jones had the following itemized deductions, should she use Schedule A or the standard deduction? The standard deduction for her tax situation is $6,350.

Donations to church and other charities, $3,050

Medical and dental expenses exceeding 10 percent of adjusted gross income, $450

State income tax, $920

Job-related expenses exceeding 2 percent of adjusted gross income, $1,450

- What would be the average tax rate for a person who paid taxes of $6,435 on a taxable income of $40,780?

- If $4,323 was withheld during the year and taxes owed were $4,122, would the person owe an additional amount or receive a refund? What is the amount?

- Using the tax table in Exhibit 3–5, determine the amount of taxes for the following situations:
- A head of household with taxable income of $62,525.
- A single person with taxable income of $62,001.
- A married person filing a separate return with taxable income of $62,365.

- Wendy Brooks prepares her own income tax return each year. A tax preparer would charge her $75 for this service. Over a period of 10 years, how much does Wendy gain from preparing her own tax return? Assume she can earn 3 percent on her savings. (LO 3.3)

- Julia Sims has $30,000 of adjusted gross income and $5,000 of medical expenses. She will be itemizing her tax deductions this year. The most recent tax year has a medical expenses floor of 10%. How much of a tax deduction will Julia be able to deduct?

***Tax Law Change: Medical and Dental expenses that can be itemized have changed over the years from 7.5% to 10%, back to 7.5% You will be told in all problems whether to use 7.5% or 10% for your calculations.

- On December 30, you decide to make a $3,000 charitable donation. (LO 3.4)
- If you are in the 28 percent tax bracket, how much will you save in taxes for the current year?
- If you deposit that tax savings in a savings account for the next five years at 8 percent, what will be the future value of that account?

error: Content is protected !!

Open chat

You can contact our live agent via WhatsApp! Via our number +1 323 471 4575.

Feel Free To Ask Questions, Clarifications, or Discounts, Available When Placing the Order.