FP 120 Entire Course

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FP 120 Entire Course
FP 120 Entire Course
$39.99
Year: 2015
  • Description

FP 120 Week 1 Time Value of Money Worksheet

Instructions

Complete the Time Value of Money Worksheet.

Post your Time Value of Money Worksheet as a Microsoft® Word® attachment.

Use the Bankrate Compound Interest Calculator and input personal figures, changing the interest rate and the compounding of the interest rate.

Submit your responses in a Microsoft® Word® document.

 

Time Value of Money

 

Refer: to Chapter 1 “Time Value of Money” section of Personal Finance.

 

In 50 to 100 words please respond to the following questions.

 

  1. What is the definition of Time Value of Money? Please define present and future value?

 

  1. How does compounding interest differ from present and future value?

 

For questions 3 – 5, use the Bankrate Compound Interest Calculator http://www.bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx and input provided figures, changing the interest rate and the compounding of the interest rate (annually, semiannually, and quarterly) as delineated below:

 

  1. You place $1,500 in a savings account earning 3% interest compounded annually. How much will you have at the end of four years? How much would you have at the end of four years if interest is compounded quarterly?

 

  1. Change the interest rate to a higher rate. How much will you have at the end of four years if interest is compounded annually at a rate of 5%? How much would you have at the end of four years if interest is compounded quarterly?

 

  1. Now change the interest rate to a lower rate. How much will you have at the end of four years if interest is compounded annually at a rate of 2.5%? How much would you have at the end of four years if interest is compounded quarterly?

 

Submit your responses in a Microsoft Word document.

 

 

FP 120 Week 1 Personal Cash Flow Statement

Instructions

Complete the Personal Cash Flow Statement.

Reflect on the money you have spent over the past month, and look back at less frequent expenses by reviewing your spending for the year.  Then enter the amount you pay and how frequently you pay it (select frequency from the drop-down). If you do not have any expenses for this category, skip it. If you have an expense but do not see a line for it, enter it in one of the rows labeled Additional Items. The Monthly Payment is the result of a calculation. If it seems incorrect, edit the $ Amount or Frequency.

Submit Microsoft® Excel® document to the Assignment Files tab.

 

Household
Rent
Mortgage
HELOC or Home Equity Loan
Maintenance/HOA Fee
Property Tax (if not included in mortgage)
Home Insurance *
Telephone/ Cellphone
Internet
Cable
Electricity
Heating/Cooling (Coal, Oil, AC)
Water
Garden/Lawn care
Alarm System
Maintenance and Repair, Including Purchases
Additional Item 1
Additional Item 2
Additional Item 3

 

 

FP 120 Week 2 Credit History Worksheet

Instructions

Complete the Credit History Worksheet.

Submit your assignment to the Assignment Files tab.

 

Credit History Worksheet

 

Directions

Identify the following factor descriptions to their corresponding C of credit. Highlight, bold, or underline the correct answer.

 

  1. Jack and Jill want to buy a car. They are using another car for ___________ as a promise to pay.

  1. Capacity
  2. Capital
  3. Collateral
  4. Character
  5. Conditions

 

  1. Under these _______________, you may still be approved with a cosigner.

  1. Capacity
  2. Capital
  3. Collateral
  4. Character
  5. Conditions

 

  1. Henry has a history of not staying with a job for an extended period of time. Which of the C’s would a lender be looking at?

  1. Capacity
  2. Capital
  3. Collateral
  4. Character
  5. Conditions

 

  1. Madaline is a stay-at-home mom seeking to start a home-based business. She would need a cosigner in order to qualify for a loan. What other C’s might she need for this loan?

  1. Capacity
  2. Capital
  3. Collateral
  4. Character
  5. Conditions

 

  1. Lenders use a debt-payment-to-income ratio to evaluate this particular C.

  1. Capacity
  2. Capital
  3. Collateral
  4. Character
  5. Conditions

 

Credit Score

 

 

Resources:

 

Directions

 

Go to the Fair Isaac Co. website, www.myfico.com. Do not buy a credit score unless you choose to do so. For this activity, go to “Learn about scores”.  Review this page, and follow the link to “What’s in your score”. From this page, follow the links to learn more about credit scores.

 

       Note: You do not have to share your personal credit score or other details in this worksheet.

 

 

Using what you have learned about credits scores and the Five C’s, respond to the following in 50-to 100-words each:

 

  1. When are the five C’s important?

 

  1. Why is a credit score important?

 

  1. What are the top 2 factors in your FICO score? What actions can you take to earn the most points in these categories?

 

Credit Reports

Directions

 

Go to www.annualcreditreport.com, the only site authorized by the Federal Trade Commission to provide free consumer credit reports. Request one free credit report from one of the three credit reporting agencies (if you are unable to download a report, complete this activity using a sample credit report from www.experian.com)

 

 

Using what you have learned about credits reports, respond to the following in 50-to 100-words each:

 

  1. What type of information is included on your credit report?

 

  1. What did you find surprising about credit reports?

 

 

FP 120 Week 2 Credit Protection and Identity Theft Worksheet

Instructions

Complete the Credit Protection and Identity Theft Worksheet.

Submit your assignment to the Assignments tab.

Credit Protection and Identity Theft

 

Directions

 

Refer to two articles found at the Federal Trade Commission:

 

Fair Credit Reporting Act: http://www.consumer.ftc.gov/articles/0155-free-credit-reports

 

Avoiding Scams: http://www.consumer.ftc.gov/articles/0120-avoiding-scams-101

 

 

Provide answers to the following questions based on your readings and your personal experiences. Answers should be 100 to 150 words each.

 

  1. If you find errors on your credit report, what steps would you take to correct them?

 

  1. There are many organizations that claim they will repair your credit for a fee. From your readings, should someone use a credit repair service? Why or why not? What are some actions these organizations can take that should be a red flag?

 

  1. Have you, a family member, or a friend been a victim of identity theft?  How did it happen? Describe the resolution process, i.e., how much time did it take, what credit damage was corrected?

 

  1. Using the FTC site, what can you do to minimize the chance of your identity getting stolen?

 

Post the Credit Protection and Identity Theft worksheet as a Microsoft® Word attachment.

 

 

FP 120 Week 2 Quiz to be taken in class

Instructions

Complete the Week 2 Quiz.

Submit your responses in a Microsoft® Word® document to the Assignment Files tab

 

Week 2 Quiz

 

  1. Which of the following is an example of open-end credit?

 

  1. An automobile loan
  2. A department store credit card
  3. A mortgage loan
  4. Single lump-sum credit

 

 

  1. Which of the following is an example of closed-end credit?

 

  1. A mortgage loan
  2. Overdraft protection
  3. A bank line of credit
  4. All of the above

 

 

  1. Which of the following is NOT one of the Five C’s of credit?

 

  1. Capacity
  2. Collateral
  3. Conditions
  4. Credit

 

 

  1. Which of the following is a characteristic of this Five C: Capacity?

 

  1. Credit payment history
  2. Total net worth
  3. Present debt
  4. None of the above

 

  1. Which of the following is NOT a credit bureau?

 

  1. Equifax
  2. Experian
  3. Fair Isaac Corporation (FICO)
  4. TransUnion

 

 

  1. Which of the following is the most effective way to improve your credit score?

 

  1. Pay your bills on time.
  2. Never exceed your credit limit.
  3. Reduce your credit utilization rate.
  4. Close your credit card accounts as soon as you pay them off.

 

 

  1. Experts suggest that the debt payments-to-income ratio should be a maximum of

 

  1. 0%
  2. 10%
  3. 20%
  4. 30%

 

 

  1. When calculating the debt-to-equity ratio, the following is NOT included

 

 

  1. Credit card balances
  2. Open-end credit
  3. Auto loan balances
  4. Mortgage balances

 

 

  1. Rachel has a net monthly income of $2,500. She has a monthly auto payment of $275, a student loan payment of $150, and a minimum credit card payment of $50. What is her debt-payments-to-income ratio?

 

  1. 8%
  2. 13%
  3. 19%
  4. 22%

 

 

  1. If you can prove a creditor has discriminated against you for any reason prohibited by this Act, you can sue for actual damages plus punitive damages, up to $10,000.

 

 

  1. Fair Credit Billing Act
  2. Truth in Lending Act
  3. Equal Credit Opportunity Act
  4. Credit Card Accountability Responsibility and Disclosure Act

 

 

  1. Which of the following is NOT true about the Fair Credit Reporting Act?

 

  1. It regulates the use of credit reports.
  2. It requires deletion of out-of-date information.
  3. It places limits on who can obtain our report.
  4. It gives borrowers the right to know why they are denied credit.

 

 

  1. Which of the following is often the first sign of a stolen identity?

 

  1. You receive bills for a credit card you never opened.
  2. You see charges to your account for items you purchased.
  3. You receive a duplicate credit card from your credit card company.
  4. All of these are typical signs of a stolen identity.

 

 

  1. If you think your identity has been stolen, which of the following actions does the Federal Trade Commission recommend you take immediately?

 

  1. Call 911.
  2. Contact your local bank.
  3. File a police report.
  4. All of these steps should be taken immediately.

 

 

  1. When you have serious debt problems, where is the best place to seek help?

 

  1. From a debt consolidation company
  2. From an independent consumer credit counseling agency, such as the National Foundation for Credit Counseling
  3. From a credit deferral service
  4. From a private loan organization, such as a bank or credit union

 

 

 

  1. Personal bankruptcy can be filed under which section(s) of the U.S. bankruptcy code?

 

  1. Chapter 7
  2. Chapter 11
  3. Chapter 13
  4. Chapters 7 and 13

 

 

  1. All of the following are signs of financial trouble except:

 

  1. You use savings to pay for necessities such as food and utilities.
  2. You exceed the credit limits on your credit cards.
  3. You pay your credit card bills in full each period.
  4. The total balance on your credit cards increases each month.

 

 

 

 

  1. Which of the following is NOT a step in correcting an error on your credit report?

 

 

  1. Contact credit reporting bureaus.
  2. Contact the creditor.
  3. Allow 30 days for correction.
  4. Stop all payment on the disputed account.

 

 

  1. Which of the following are examples of what the Fair Credit Billing Act does?

 

 

  1. Corrects billing errors
  2. Allows creditors 30 days to investigate a dispute
  3. Requires deletion of out-of-date information
  4. All of the above

 

 

  1. Which of the following are examples of what the Fair Credit Billing Act does?

 

 

  1. Corrects billing errors
  2. Allows creditors 30 days to investigate a dispute
  3. Requires deletion of out-of-date information
  4. All of the above

 

 

 

  1. A direct loan for personal purposes, home improvements, or vacation expenses is called

 

 

  1. A credit card
  2. A revolving check credit
  3. Interest
  4. An installment cash credit

 

 

FP 120 Week 3 Using Consumer Credit Worksheet

Instructions

Complete the Using Consumer Credit Worksheet

Submit your assignment to the Assignment Files tab.

Using Consumer Credit Worksheet

Assignment: Using Consumer Credit Worksheet

 

Purpose: The Using Consumer Credit Worksheet is designed to test a student’s understanding of credit card interest rates and how to use credit calculations for various purchases.

 

  1. Calculate the following using the Bankrate calculator at:

http://www.bankrate.com/calculators/managing-debt/minimum-payment-calculator.aspx

 

Credit Card BalanceInterest RateMinimum/Fixed PaymentNumber of Months to Pay in FullTotal Interest Paid
$5,00013%Minimum  
$5,00018%Minimum  
$2,00015%Fixed $50  
$2,00015%Fixed $100  

  • Minimum in this example should be Interest plus 1% of balance, and it will then default to a $15 minimum.

 

  1. When making the minimum payment, how much more interest do you pay when the interest rate is 18% rather than 13%?

 

  1. In the fixed rate example, how much would you save by doubling the fixed payment to $100 a month instead of $50 per month?

 

 

  1. Assume you have a friend who is making the minimum monthly payments on a credit card. Your friend asks your thoughts on what he is doing.  Based on these calculations and what you have learned, how would you advise your friend about making only minimum payments? Your response should be at least 100 words.

 

  1. Calculate the cost of credit using the following formulas. Show your calculations.

Simple Interest: You borrow $2,000 for car repairs. The interest rate is 5%, and you will pay it in full one year later.

 

 

Simple Interest on the Declining Balance: You borrow $2,000 for car repairs. The interest rate is 5% and you will make two equal payments over a year (for example, half in January, and half in July)

 

 

Answer each of the following questions in 50-100 words each:

 

  1. Grayson just received his credit card statement. He noticed a charge for $40 to a store he has never patronized.  What steps should he take to handle this?

 

 

  1. List the advantages and disadvantages of using credit. Provide at least two of each.

  

Home Buying

 

  1. Complete the “Buy or Rent” calculator using your own data. In 50-100 words answer the following: What was the recommendation? What were the factors that led to that recommendation? Do you agree or disagree with the recommendation? Why?

 

  1. In a minimum of 100 words, explain the main benefits and drawback of renting and of owning a home?

 

  1. Review Exhibit 7-4 on page 224 of the textbook. In at least 100 words, summarize the steps in the home-buying process.

 

  1. Review Exhibit 7-6 on page 229 of the textbook. Estimate the affordable monthly mortgage payment, the affordable mortgage amount, and the affordable home purchase price for the following situation. Show your calculations.

  • Monthly gross income: $2,950
  • Other debt, monthly payment: $160
  • Down payment to be made: 15% of purchase price
  • Monthly property tax and insurance: $210
  • 30 year mortgage at 6%

 Enter your calculation and response in this column
Step 1: Determine the monthly gross income (annual income divided by 12). 
Step 2. Multiply step 1 by 33% for a PITI (principal, interest, taxes, and insurance) guideline.

NOTE: With a down payment of at least 5%  lenders use 33% of  gross income as a guide for PITI (principal, interest, taxes, and insurance)

 
Step 3. Subtract other debt payments from the result of Step 2 to determine the Affordable Monthly Mortgage Payment.   
Step 4. Divide the result of Step 3 by 6.00 (this is the mortgage payment factor from Exhibit 7-7 based on a 30 year loan at 6%) and then multiply this by $1,000. This is the Affordable Mortgage Amount. 
Step 5. Divide the affordable mortgage amount by .85 (This is 1 minus the down payment percentage) to determine the Affordable Home Purchase. 

 

 

Car Buying

 

  1. Review Exhibit 6-2 on page 196 of the textbook. In at least 100 words, summarize the steps in the car-buying process.

 

  1. Using the framework on page 199, prepare a financial comparison of buying and leasing a car with a cash price of $24,000. Show your calculations.

 

Instruction:  Complete the chart below to calculate the cost of buying a car.

  • Down payment (to buy/finance): $4,000
  • Monthly loan payment: $560
  • 48 month loan and lease
  • Value of vehicle at end of loan: $7,200

Steps to Buying a Car taken from “Figure it Out” on page 199Enter your calculation and response in this column
Step 1. Total down payment 
Step 2.  Total cost of payments: Multiply the Monthly Loan Payment by the Length of the Loan 
Step 3: Identify the opportunity cost of the security deposit: Multiply the Security deposit by the Length of the Loan by 3% 
Step 4.  Add the result of Step 1, 2 and 3. 
Step 5: To determine the total cost of buying subtract the Value of the vehicle at the end of the loan from the result of Step 4. 

 

Instruction:  Complete the chart below to calculate the cost of leasing a car.

  • Security deposit (to lease): $1,200
  • Monthly lease payment: $440
  • 48 month loan and lease
  • End-of-lease charges: $600

Steps to Leasing a Car taken from “Figure it Out” on page 199Enter your calculation and response in this column
Step 1. Multiply the Monthly Lease Payment by the Length of the Lease 
Step 2: Identify the opportunity cost of the security deposit: Multiply the Security deposit by the Length of the Lease by 3% 
Step 3. To determine the total cost of leasing add the results of Step 1 and 2 to the End-of-Lease Charges 

 

 

 

FP 120 Week 3 Education Funding Worksheet

Instructions

Resources:

  • Tuition and Fees Calculator/ Financial Plan
  • National Student Loan Data System
  • Bureau of Labor Statistics
  • Phoenix Career Guidance System

Read the Education Funding Worksheet instructions.

Complete the Education Funding Worksheet in Microsoft® Excel®. Responses will include numbers and text to respond to questions.

Submit your assignment to the Assignment Files tab.

 

This year’s total tuition costs 
   
How much of your tuition is currently funded through loans? 
   
How much of your tuition is currently funded through personal savings or salary? 
   
How much of your tuition is currently funded through scholarships, grants (including Pell Grants), military benefits, employer reimbursement, and/or other sources? 
   
Unfunded tuition costs$0
   
   
These options are best suited to address my unfunded tuition:$ Covered
   
1  
2  
3  
4  
5  
 Total$0
   
List at least two ways you could change your educational financial plan in future years 
   
 
   
How much student loan debt do you expect to have at graduation? 
   
What is the average starting salary you expect after graduation? 
   
Do your student loans exceed your expected annual starting salary?NO
   
What can you do to reduce the amount you borrow?Potential
If you do not have any loans, what would you suggest to another student?Savings
1  
2  
3  
4  
 Total$0
   
What is the standard monthly payment for the total amount you expect to borrow? 
   
What other repayment plans could help you lower your monthly payment? 

 

 

FP 120 Week 3 Quiz in class

Instructions

Complete the Week 3 Quiz.

Submit your responses in a Microsoft® Word® document to the Assignment Files tab

 

Week 3

 

3.1 Concept: Advantages and disadvantages of consumer credit

 

  1. Which of the following is NOT correct?

 

  1. Using credit is appropriate to pay for medical emergencies.
  2. Using credit can increase the amount of money that will be available to spend in the future.
  3. Using credit sometimes occurs automatically, such as for water or electricity usage.
  4. Using credit allows consumers to enjoy goods and services now and pay later.

 

  1. Many think that perhaps the greatest disadvantage of using credit is
  2. The temptation to overspend
  3. The convenience offered instead of using cash
  4. The float from using credit
  5. The increase in total purchasing power

 

 

3.2 Concept: Types and sources of consumer credit

 

  1. Which of the following is an example of open-end credit?

 

  1. An automobile loan
  2. A department store credit card
  3. An installment loan for purchasing furniture
  4. A mortgage loan

 

  1. If Vince charged $200 on his credit card with 18% APR and he paid his balance in full within the grace period, how much was he required to pay?

 

  1. $18.00
  2. $182.00
  3. $200.00
  4. $236.00

 

3.3 Concept: Cost of credit using various interest formulas

  1. Sam is comparing the costs of two loans. One is due in one year and the other is due in four years. Both have the same stated rate of interest. Which of the following is true?

 

  1. The principal paid for the one-year loan will be lower than the principal paid for the four-year loan.
  2. The principal paid for the one-year loan will be higher than the principal paid for the four-year loan.
  3. The interest paid for the one-year loan will be lower than the interest paid for the four-year loan.
  4. The interest paid for the one-year loan will be higher than the interest paid for the four-year loan.

 

 

  1. If you double the monthly payment on a credit card, the loan will be paid off in

 

  1. Half the time
  2. Less than half the time
  3. More than half the time
  4. Not enough information is available to answer

 

3.4.A  Concept: Effective consumer buying strategies

  1. Before taking out a loan, you should ask yourself whether you can meet all your essential expenses and still afford the monthly loan payments. This can be determined by

 

  1. Adding up basic monthly expenses then subtracting this total from gross pay
  2. Asking what you plan to give up to make the monthly loan payment
  3. Multiplying your take-home pay by 50% and subtracting your current loan payments
  4. Adding up basic monthly expenses, subtracting this total from take-home pay and, if needed, figuring out what to give up to make the payment

 

  1. The text identifies several phases in the buying process. The correct order of the phases is

 

  1. Evaluating alternatives, pre-shopping activities, selection and purchase, post-purchase activities
  2. Pre-shopping activities, selection and purchase, evaluating alternatives, post-purchase activities
  3. Pre-shopping activities, evaluating alternatives, selection and purchase, post-purchase activities
  4. Evaluating alternatives, selection and purchase, pre-shopping activities, post-purchase activities

 

  1. Information gathering is part of the ________________ phase of the decision-making process.

 

  1. Evaluating alternatives
  2. Pre-shopping activities
  3. Selection and purchase
  4. Ordering activities

 

3.4.B Concept: Effective strategies when buying a car

 

  1. The expected value at the end of a lease is called the

 

  1. Invoice price
  2. Sticker price
  3. Capitalized cost
  4. Residual value

 

  1. A potential problem with having a long car loan is

 

  1. Low monthly payments
  2. Low-interest loan
  3. Negative equity
  4. Loan preapproval

 

 

 

  1. All of the following are fixed operating costs for a vehicle except

 

  1. Insurance
  2. Interest on an auto loan
  3. License and registration
  4. Maintenance and repairs

 

3.5 Concept: Cost and benefits of renting and buying

 

  1. Which of the following is a disadvantage of renting?

Text Location: p. 223, Difficulty: Medium, Question from: Test Bank

 

  1. Renters have fewer responsibilities than home owners.
  2. Tenants cannot take tax deductions for mortgage interest and property tax.
  3. Renters usually do not have to be concerned with maintenance and repairs.
  4. Taking possession of a rental unit is less expensive than buying a home.

 

  1. Donald wanted to buy a house in the country, so he sought advice from his cousin Evan. Evan explained the advantages and disadvantages of home ownership; however, he had some information incorrect. Which of the following is incorrect?

 

  1. An advantage is that Donald can deduct mortgage interest and real estate taxes.
  2. A disadvantage is that Donald is responsible for maintenance and costs of repairs and home improvements.
  3. I An advantage is that the down payment required is less than the security deposit for a rental.
  4. A disadvantaged is that real estate taxes are a major expense for home owners.

 

3.6 Concept: Process of and costs of buying a home

  1. What should a home buyer consider when evaluating a house?

 

  1. Zoning laws
  2. School system
  3. Property values of the community
  4. All of these should be evaluated.

 

  1. Trenton wants to buy a house but can provide only a 10% down payment. He probably will be required to have

 

  1. Amortization
  2. Escrow
  3. Points
  4. Private mortgage insurance

 

 

 

 

3.7.A Concept: Options to pay for college

 

  1. What is a main difference between a subsidized and an unsubsidized Stafford loan?

 

  1. A subsidized loan is interest-free for the first 36 months after graduation; an unsubsidized loan is interest-free for only 6 months after graduation.
  2. A subsidized loan does not have to be paid back on the death of a student, but an unsubsidized loan has to be.
  3. The federal government pays the interest during certain periods for a subsidized loan; students are responsible for interest at all times with an unsubsidized loan.
  4. The federal government pays the interest during certain periods for an unsubsidized loan; students are responsible for interest at all times with a subsidized loan.

 

  1. This type of financial aid typically does not need to be repaid

 

  1. Pell grants
  2. Scholarships
  3. Employer tuition benefits
  4. All of the above

 

3.7.B Concept: Repayment requirements of student loans

  1. A temporary postponement of student loan payments is

 

  1. Reduction
  2. Consolidation
  3. Deferment
  4. Forgiveness

 

  1. Federal student loans can be discharged only under special circumstances. Which of the following would NOT result in loan discharge?

 

  1. Total and permanent disability
  2. Partial disability
  3. Death
  4. Unemployment

 

 

 

FP 120 Week 4 Investments Worksheet

Instructions

Complete the University of Phoenix Material: Investments Worksheet.

Submit your assignment to the Assignment Files tab.

 

Investments Worksheet

 

Answer the following questions in at least 50 words each:

 

  1. What are the main differences between a 401K and a Roth IRA?

 

  1. How would you explain the difference between a stock, a bond, and a mutual fund?

 

  1. What are the risks and rewards of investing?

 

  1. ow can you minimize the risks associated with investing?

 

  1. What would affect your decision to invest?

 

 

FP 120 Week 4 Retirement Planning Worksheet

Instructions

Complete the Retirement Planning Worksheet

Submit your assignment to the Assignment Files tab.

Retirement Planning Worksheet  

 

Step 1Estimate your retirement income at: http://www.bankrate.com/calculators/retirement/retirement-plan-income-calculator.aspx

You will be asked to answer six questions.  If you are unsure of what the fields are, the definitions are below on the same page.  There are some assumptions about how much your investments will earn, inflation rates, and tax rate; you can edit these to see how they impact the calculation.

  • Based on your inputs, what is your estimated monthly retirement income before tax/inflation?

 

  • Based on your inputs, what is your estimated monthly retirement income after tax/inflation?

 

Step 2:  Determine how your current retirement strategy will provide for retirement income:

http://www.bankrate.com/calculators/retirement/retirement-plan-calculator.aspx

You will be asked to answer eight questions.  If you are unsure of what the fields are, the definitions are below on the same page.  There are some assumptions about how much your investments will earn, inflation rates, and if Social Security income is considered; you can edit these to see how they impact the calculation.

  • Based on your inputs, how much monthly income is your current strategy estimated to provide?

 

  • Assume that monthly income will not be sufficient. In at least 100 words, what steps can you take now and/or in retirement to live comfortably in retirement?

 

Step 3:   Calculate how savings can grow

How long will it take you to reach $1 million in savings?   Answer the four questions in this calculator to calculate when you could become a millionaire: http://www.igrad.com/schools/universityofphoenix/?TargetURL=%2FResources%2Fmillionaire-calculator

  • How many years will it be before you reach $1 million in savings?

 

  • Thinking of what your life might be like in retirement, would $1 million be sufficient to support yourself? (Some things to consider would be your health, where you live, and how much money you owe.) In at least 100 words explain why or why not?

 

 

 

FP 120 Week 4 Quiz – in class

Instructions

Complete the Week 4 Quiz.

Submit your responses in a Microsoft® Word® document to the Assignment Files tab

 

Week 4

 

4.1 Concept: Why you should establish an investment program

 

  1. A valid long-term investment goal is

 

  1. Saving $5,000 per year for 40 years for retirement
  2. Spending less than $500 per month for housing
  3. Accumulating $3,000 in a savings account over the next 18 months
  4. Using credit cards less in the next six months

 

  1. A valid short-term investment goal is

 

  1. Saving $5,000 per year for 40 years of retirement
  2. Spending less than $500 per month for housing
  3. Accumulating $3,000 in a savings account over the next 12 months
  4. Using credit cards less in the next six months

 

4.2 Concept: Safety, risk, income, growth and liquidity effects on your investment program

 

  1. As people approach retirement, which of the following holds true for most?

 

  1. Their choices of investments do not change.
  2. They choose more conservative investments.
  3. They choose more risky investments.
  4. They move all their money into certificates of deposit.

 

  1. When choosing an investment, you should consider risk. The four primary risk components are

 

  1. Business failure, inflation, buying power, stock
  2. Buying power, inflation, interest rate, market
  3. Inflation, interest rate, business failure, market
  4. Market, bond, stock, inflation

 

  1. If your main focus is to have your investments increase in value, you are most concerned with

 

  1. Income
  2. Growth
  3. Liquidity
  4. Market risk

 

4.3 Concept: Reducing investment risk

 

  1. The process of spreading your assets among several different types of investments to lessen risk is called

 

  1. Asset allocation
  2. Asset combination
  3. Asset investments
  4. Asset returns

 

  1. If you need access to your funds in two years or less, which of the following investments would be least appropriate?

 

  1. Cash
  2. Certificates of deposit
  3. Short-term government bonds
  4. Stocks and mutual funds

 

4.4.A  Concept: Bonds

 

  1. A U.S. government security issued in minimum units of $100 with 30-year maturities is called a

 

  1. Treasury bill
  2. Treasury note
  3. Treasury bond
  4. Savings bond

 

  1. Why do investors purchase corporate bonds?

 

  1. Dividend income
  2. Repayment at maturity
  3. Repayment at maturity and a possible increase in value
  4. Dividend income and repayment at maturity

 

4.4.B Concept: Stocks

 

  1. If you want to compare two companies, you should use

 

  1. Divided yield
  2. Price per share
  3. Price-earnings ratio
  4. Net income

 

  1. Ethan wants to purchase some stock for the first time. Which of the following is correct?

 

  1. He should use an online broker to get specific advice about purchasing stock.
  2. His purchase price will exactly equal the number of shares he purchases times the price per share and is known in advance.
  3. If he uses a market order, he can lock in the price at which he wants to buy the stock.
  4. His commission should be lower at an online broker than at a full-service broker.

 

 

4.4.C Concept: Mutual Funds and ETF’s

 

  1. Many mutual funds charge a commission every time they are purchased by investors. These are called

Text Location: p. 428, Difficulty: Medium, Question from: Test bank

 

  1. Load funds
  2. Closed-end funds
  3. Exchange-traded funds
  4. Open-end funds
  5. Which of the following types of stock funds invests in the same companies included in the Standard & Poor’s 500 stock index?

 

  1. Equity income funds
  2. Growth funds
  3. Index funds
  4. International funds

 

4.4. D Concept: 401(k), and IRA’s

 

  1. Julian’s annual contributions to his retirement are not tax-deductible, but his earnings accumulate tax-free. He is investing in a

 

  1. 401(k) plan
  2. Regular IRA
  3. Roth IRA
  4. SEP plan

 

  1. Money in a 401(k) grows in what way

 

  1. Tax-free
  2. Tax-exempt
  3. Tax-deferred
  4. Taxable

 

4.5 Concept: Retirement planning strategy

 

  1. If you start a new job and are offered the opportunity to participate in the company’s 401(k) or 403(b) retirement plan, which of the following decisions can affect your financial future?

 

  1. Participating in the retirement account to reduce income taxes
  2. Participating in the retirement account to take advantage of the employer’s matching contributions
  3. Basing your actual choice of investments on your age, how long before you retire, and your tolerance for risk
  4. All of these decisions would have a financial impact.

 

  1. When planning for retirement

 

  1. A mortgage should not affect your financial planning.
  2. Investments should be evaluated to determine whether their income can help cover living expenses.
  3. Keeping your current, large house will be cheaper to maintain than to move to a smaller house.
  4. Life insurance should be avoided.

 

4.6 Concept: Wills and estate planning

  1. Jacob is updating his estate planning and wants to set up the legal document to leave everything to his wife. He is writing a(n)

 

  1. Guardian will
  2. Simple will
  3. Stated amount will
  4. Traditional marital will

 

 

  1. A legal arrangement that helps manage the assets of your estate for your benefit or that of your beneficiaries is called a

 

  1. Formal will
  2. Trust
  3. Guardian
  4. Holographic will

 

  1. What is the difference between a will and a living will?

 

  1. A will is used to distribute your property after your death; a living will allows you to specify, in writing, your health care preferences for the time when you no longer have the capacity to provide consent.
  2. A living will terminates if you become incompetent, while a will continues in force even if you become incapacitated.
  3. A will describes your preferences regarding treatment if you are faced with a serious accident or illness; a living will specifies what physicians are allowed to treat you.
  4. A living will appoints someone to act on your behalf in financial or medical matters; a will specifies how your assets will be distributed on your death.

 

 

 

FP 120 Week 5 Insurance Worksheet

Instructions

Complete the Insurance Worksheet.

Submit your assignment to the Assignment Files tab.

Insurance Worksheet

 

Directions:

Match the following word with the correct definition.

 

  1. Premium

  1. The set amount that a policyholder must pay per loss on an insured policy

 

  1. Deductible

  1. A flat fee that a policyholder must pay for each received service

 

  1. Copayment

  1. The protection provided by the terms of an insurance policy

 

  1. Coverage

  1. The amount of money a policyholder is charged for an insurance policy

 

 

 

Directions:

 

For each type of insurance listed, explain in at least 50 or more words coverage characteristics provided.

 

Type of InsuranceDescription of Coverage
Auto

 

 

 

 

 

Bodily Injury Coverage

 

Property Damage Coverage

 

Car Rental

 

Discounts

 

Home and Property

 

 

 

 

 

Replacement value of home

 

Actual Cash Value

 

Liability Coverage

 

Location influences

 

Discounts

 

Health

 

 

 

 

 

Health Maintenance Organization (HMO)

 

Preferred Provider Organization (PPO)

 

Point-of-Service Plan (POS)

 

Health Care Accounts

 

Medicare

 

Medicaid

 

Long-term Care

 

Disability

 

 

 

 

 

Short-term

 

Long-term

 

Social Security

 

Workmen’s Compensation

 

Life

 

 

 

 

Term Life

 

Whole Life

 

Universal

 

 

 

 

FP 120 Week 5 Final Summary: Putting it All Together

Instructions

We covered many important topics during this class. Understanding spending and income, cutting expenses, saving and investing money, building an emergency fund, improving credit, getting out of debt, protecting your assets, and setting financial goals are just some of those topics. These concepts will aid your continued personal financial planning for the rest of your life.

Submit a 350- to 700-word summary addressing the following questions:

  • How would you explain the value of financial planning to friends or family?
  • Which topics will you discuss with children in your life?
  • Which topics do you feel are most important for adults to fully understand? Explain why you chose these topics.
  • What financial goals have you set for yourself? How will you meet them?  Explain what steps you will take to begin saving toward these goals.

Submit your assignment to the Assignment Files tab.

 

 

FP 120 Week 5 Understanding Taxes Worksheet

Instructions

Resource: Taxes

Complete the Understanding Taxes Worksheet. (Note: you will not be using your personal tax information.)

Submit the completed Understanding Taxes Worksheet as a Microsoft® Word® attachment to the Assignment Files tab.

 

Understanding Taxes Worksheet

 

 

Resources: The United States Internal Revenue Service at www.IRS.gov

 

Directions: Use the links provided for each tax form to answer the correlating questions. Each response should be 50- to 150-words.

 

 

Understanding the 1040 Form

 

Visit 1040A  Form at http://www.irs.gov/pub/irs-pdf/f1040a.pdf

 

  1. Compare and contrast the 1040, 1040A, and 1040EZ form. Which form would a single student use? If the student was married with children, which form would most likely be used?

 

  1. If a person is single and head of household, why would he or she be able to file “head of household”?   Are there any benefits to filing as head of household, rather than single?

 

  1. Define capital gains. What impact can this have on a refund or payment of taxes?

 

  1. What is adjusted gross income? On which line of the tax form is total income located?

 

 

  1. What lines would student loan interest deductions and tuition and fees be located on the 1040A form?  What form is used to document a student’s tution and fees?

 

  1. What are tax credit and  tax deductions? Explain each.

 

  1. When would a person use a third party designee?

 

Visit W-2 Wage and Tax Form at http://www.irs.gov/pub/irs-pdf/fw2.pdf.

 

  1.  What is primary purpose of the W-2 Wage and Tax Form?

 

  1. When does a taxpayer receive the W-2? Who will provide this form to the taxpayer?

 

  1. What items on the W-2 make up Federal Insurance Contributions Act or FICA?

 

  1. What form should accompany the W-2 for Child and Dependent Care Expense?

 

  1. What is the date that taxes are due? If you need an extension what form would you use? How long is the extension? Are there any penalties for requesting an extension?

 

 

FP 120 Week 5 Final Exam in class

Instructions

Complete the Comprehensive Final Exam.

Submit your responses in a Microsoft® Word® document to the Assignment Files tab

 

 

5.1 Concept: Homeowners and Renters insurance

 

  1. Liability is defined as

 

  1. An insurance program for individuals and households
  2. The legal responsibility for the financial cost of another person’s losses or injuries
  3. Negligence
  4. A loss due to physical damage

 

  1. Which of the following best defines “actual cash value” in a home or renter’s insurance policy?

 

  1. Insurance that pays the replacement value of damaged or stolen
  2. Insurance that pays for additional living expense coverage
  3. Insurance that pays the depreciated value of damaged or stolen property
  4. Insurance that pays for the items included in a “rider”

 

5.2 Concept: Auto insurance

 

  1. Motor vehicle coverage typically includes all of the following except

Text Location: p. 265, Difficulty: Medium, Question from: Test bank

 

  1. Most legal expenses
  2. Bodily injury liability up to a specified level for all injured in an accident
  3. Medical payments up to the policy limit
  4. Bodily injury liability of all expenses, no matter the cost, for the most injured

 

  1. Which type of auto insurance coverage pays if your car is stolen?

Text Location: p. 266, Difficulty: Easy, Question from: SME

 

  1. Liability
  2. Collision
  3. Comprehensive
  4. Replacement

 

5.3 Concept: Health insurance

 

  1. The set amount that you must pay toward medical expenses before he insurance company pays benefits is called

 

  1. Reimbursement
  2. Out-of-pocket limit
  3. Deductible
  4. Internal limit

 

  1. Which of the following is NOT a private health care plan?

 

  1. Health maintenance organization (HMO)
  2. Medicare
  3. Hospital and medical service plan
  4. Preferred provider organization (PPO)

 

5.4 Concept: Disability insurance

 

  1. All of the following are sources of disability income except

 

  1. Worker’s compensation
  2. Social security
  3. Private income insurance programs
  4. All of these are sources of disability income.

 

  1. What is a function of disability insurance?

 

  1. Covers medical costs incurred by an insured and their family
  2. Part B covers medical costs for you and passengers of your insured vehicle, if you are at fault.
  3. Provides income replacement to individuals who are unable to work as a result of illness or accident
  4. Covers against the risk that personal property will be stolen or damaged by others

 

 

5.5 Concept: Need for Life insurance

 

  1. Most people buy life insurance to

 

  1. Pay off a mortgage
  2. Protect the people who depend on the insured from financial losses caused by his or her death
  3. Pay for a vacation
  4. Pay taxes

 

  1. Which of the following households most likely has the greatest need for life insurance?

 

  1. Single adult living alone
  2. Adult child living with parents
  3. Retired couple with a pension
  4. Household with children

 

  1. Judy and James have a 4-year old child. They plan to purchase a life insurance using this formula: Current income X 7 X 70%. Which method are they using to determine their life insurance needs?

 

  1. Easy method
  2. Formal calculation method
  3. Nonworking spouse method
  4. Family needs method

 

5.6 Concept: Types of Life insurance policies

 

  1. Which of the following is NOT a type of permanent insurance?

 

  1. Whole life
  2. Straight life
  3. Term life
  4. Cash value life

 

  1. Pam just started working at a company and wants to get insurance coverage. She does not want to take a medical exam to get coverage because she has some underlying health conditions and is concerned that she might not qualify for a policy. Which of the following life insurance policies should she apply for?

 

  1. Adjustable life
  2. Group life
  3. Limited life
  4. Universal life

 

5.7 Concept: Saving money on federal taxes

 

  1. When calculating federal income taxes, what increases “income”?

 

  1. Tax-exempt income
  2. Tax-deferred income
  3. Exclusions
  4. Alimony received
  5. Fred has been completing his own tax return for many years. The IRS has recently contacted him with questions about some of his prior returns. How many years back is he responsible for providing documentation?

 

  1. Until he files his returns
  2. 3 years
  3. 6 years
  4. 10 years

 

  1. The form you file with your employer to determine how much income tax is withheld from your check is

 

  1. W-2
  2. W-4
  3. 1098-E
  4. 1099

 

5.8 Concept: Filing a federal tax return

 

  1. This type of deduction represents the set amount of income on which no taxes are paid

 

  1. Exemption
  2. Itemized deduction
  3. Standard deduction
  4. Tax deduction

 

  1. At the end of the year, employees receive a ________ form that reports annual earnings and the amounts deducted for taxes from their employers.

 

  1. 1040
  2. 1099
  3. W-2
  4. W-4

 

  1. Nancy is married to Jerry and needs to complete her tax form. They both earn about the same amount of money each year. What filing status would be best for them?

 

  1. Single
  2. Married, filing a joint return
  3. Married, filing individually
  4. Head of household

 

  1. The major sections of Form 1040 include all of the following except

 

  1. Filing status and exemptions
  2. Adjustments to income (AGI)
  3. Tax credits
  4. All of these are major sections of Form 1040.

 

 

Weeks 1-4

 

1.3 Concept: Calculate time value of money for financial decisions

 

  1. To calculate the time value of money, we need to consider all of the following except the

 

  1. Amount of the savings
  2. Type of investment
  3. Length of time the money is invested
  4. Annual interest rate

 

2.3.A  Concept: Credit reports and scores

 

  1. Which of the following is the most effective way to improve your credit score?

 

  1. Close your credit-card accounts as soon as you pay them off.
  2. Never exceed your credit limit
  3. Pay your bills on time
  4. Reduce the amount of credit used

 

2.3.B Concept: Credit approval process

 

  1. Experts suggest that the debt payments-to-income ratio should be a maximum of

 

  1. 10%
  2. 20%
  3. 30%
  4. 40%

 

2.5 Concept: Correcting credit report errors

 

  1. Most information on your credit file can be reported for up to how many years?

 

  1. Four years
  2. Five years
  3. Six years
  4. Seven years

 

3.1 Concept: Advantages and disadvantages of consumer credit

 

  1. Which of the following questions is NOT needed before deciding how and when to make a major purchase?

 

  1. Does the purchase fit my budget?
  2. Could I postpone the purchase?
  3. Could I use the credit I need for this purchase in some better way?
  4. All of these are valid questions to ask.

 

3.3 Concept: Cost of credit using various interest formulas

  1. Tanya received a $1,000 loan from the bank for a vacation. The bank is using the simple interest formula for this one-year, 9% loan. What is her total interest?

 

  1. $9
  2. $45
  3. $90
  4. $1,009

 

3.4.A  Concept: Effective consumer buying strategies

  1. Before taking out a loan, you should ask yourself whether you can meet all your essential expenses and still afford the monthly loan payments. This can be determined by

 

  1. Adding up basic monthly expenses then subtracting this total from gross pay
  2. Adding up basic monthly expenses, subtracting this total from take-home pay and, if needed, figuring out what to give up to make the payment
  3. Asking what you plan to give up to make the monthly loan payment
  4. Multiplying your take-home pay by 50% and subtracting your current loan payments

 

3.4.B Concept: Effective strategies when buying a car

 

  1. All of the following are fixed operating costs for a vehicle except

 

  1. Insurance
  2. License and registration
  3. Maintenance and repairs
  4. Monthly loan payment

 

3.5 Concept: Cost and benefits of renting and buying

  1. Which of the following is NOT correct?

 

  1. Home ownership usually has long-term financial advantages.
  2. Lifestyle and financial factors should be analyzed to determine if you should rent or buy.
  3. Renting is usually less expensive in the short run.
  4. Traditional financial guidelines suggest that your home should cost about five times your annual income.

 

3.6 Concept: Process of and costs of buying a home

 

  1. Major factors that affect the affordability of your mortgage include all of the following except

 

  1. Income
  2. Length of the loan
  3. Size of the home
  4. Current interest rates

 

3.7.A Concept: Options to pay for college

  1. Students should aim to keep their total student loan debt to

 

  1. About the total cost of 4 years of their education
  2. Less than the salary they are likely to make their first year out of school
  3. Less than 200% of their first-year salary
  4. Less than 150% of their first-year salary

 

3.7.B Concept: Repayment requirements of student loans

  1. Which of the following payment plans available for federal student loans is based on income levels?

 

  1. Graduated
  2. Income-dependent
  3. Income-based
  4. Standard

 

4.1 Concept: Why you should establish an investment program

 

  1. A valid, long-term investment goal is

 

  1. Accumulating $3,000 in a savings account over the next 12 months
  2. Saving $5,000 per year for 40 years for retirement
  3. Spending less than $750 per month for housing
  4. Using credit cards less in the next six months

 

4.2 Concept: Safety, risk, income, growth and liquidity effects on your investment program

 

  1. Which of the following risks reduces your buying power?

 

  1. Business failure
  2. Inflation
  3. Interest rate
  4. Market

 

4.3 Concept: Reducing investment risk

 

  1. The process of spreading your assets among several different types of investments to lessen risk is called

 

  1. Asset investments
  2. Asset allocation
  3. Asset returns
  4. Asset combination

 

4.4.A Concept: Bonds

 

  1. What happens to the price of bonds when interest rates go up?

 

  1. It stays the same. Bond prices are determined by the market dynamics of buying and selling.
  2. Bond prices are unaffected by fluctuations in interest rates.
  3. It goes down.
  4. It goes up.

 

4.4.B Concept: Stocks

 

  1. Which of the following is a profitability ratio that uses the number of outstanding shares in the calculation?

 

  1. Price per share
  2. Capital gain
  3. Net income
  4. Earnings per share

 

4.4. D Concept: 401(k) and IRA’s

 

  1. Money in a 401(k) grows in what way

 

  1. Tax-deferred
  2. Taxable
  3. Tax-free
  4. Tax-exempt

 

4.5 Concept: Retirement planning strategy

 

  1. If you start a new job and are offered the opportunity to participate in the company’s 401(k) or 403(b) retirement plan, which of the following decisions can affect your financial future?

 

  1. Participating in the retirement account to reduce income taxes
  2. Participating in the retirement account to take advantage of the employer’s matching contributions
  3. Basing your actual choice of investments on your age, how long before you retire, and your tolerance for risk
  4. All of these decisions would have a financial impact.

 

4.6 Concept: Wills and estate planning

 

  1. What is the difference between a will and a living will?

 

  1. A will is used to distribute your property after your death; a living will allows you to specify, in writing, your health care preferences for the time when you no longer have the capacity to provide consent.
  2. A will describes your preferences regarding treatment if you are faced with a serious accident or illness; a living will specifies what physicians are allowed to treat you.
  3. A living will terminates if you become incompetent, while a will continues in force even if you become incapacitated.
  4. A living will appoints someone to act on your behalf in financial or medical matters; a will specifies how your assets will be distributed on your death.

 

 

 

 

 

  • Concept: Influences on financial goals and decisions

 

  1. The stages that an individual goes through based on stages in the family and financial needs is called the

 

 

  1. Financial planning process
  2. Budgeting procedure
  3. Adult life cycle
  4. Personal economic cycle

 

  1. The Rule of 72 is

 

 

  1. A tool to determine the number of years until retirement for an employee
  2. Used to estimate how long it takes for prices to double using a given annual inflation rate
  3. The legal code for requiring companies to provide a match on retirement savings
  4. Used to calculate interest rates for savings

 

 

 

  1. SMART Goals contain all of the following except:

 

  1. Specific – knowing exactly what the goals are and how to attain them
  2. Action Oriented – the bases for the goals
  3. Manageable – to be able to understand the written goals
  4. Time based – the time frame needed to reach the goal

 

 

  1. Which of the following is an example of open-end credit?
  2. An automobile loan
  3. A department store credit card
  4. A mortgage loan
  5. Single lump-sum credit

 

 

 

2.2 Concept: Five C’s of credit

 

  1. Which of the following is NOT one of the Five C’s of credit?

 

  1. Capacity
  2. Collateral
  3. Conditions
  4. Credit

 

  1. Which of the following is a characteristic of this Five C: Capacity?

 

  1. Credit payment history
  2. Total net worth
  3. Present debt
  4. None of the above

 

 

 

 

3.2 Concept: Types and sources of consumer credit

  1. Which of the following electronically subtracts money from your savings or checking account to pay for goods and services?

  2. A credit card
  3. Closed-end credit
  4. A debit card
  5. A gift card

 

 

 

  1. Sam is comparing the costs of two loans. One is due in one year and the other is due in four years. Both have the same stated rate of interest. Which of the following is true?

 

  1. The principal paid for the one-year loan will be lower than the principal paid for the four-year loan.
  2. The principal paid for the one-year loan will be higher than the principal paid for the four-year loan.
  3. The interest paid for the one-year loan will be lower than the interest paid for the four-year loan.
  4. The interest paid for the one-year loan will be higher than the interest paid for the four-year loan.

 

 

4.1 Concept: Why you should establish an investment program

 

  1. If you invest $4,000 per year over the next 40 years for retirement, which of the following is correct?

 

  1. A low rate of return will give you the highest total dollar return.
  2. A high rate of return will give you the highest total dollar return.
  3. The rate of return does not matter; your total dollar return will be the same with any investment.
  4. We cannot compare the total dollar return for a low rate of return or a high rate of return.

 

 

4.3 Concept: Reducing investment risk

 

  1. The process of spreading your assets among several different types of investments to lessen risk is called

 

  1. Asset allocation
  2. Asset combination
  3. Asset investments
  4. Asset returns