Exam 3: Time Value of Money Concepts
Exam 1: Personal Financial Planning8 Questions
Exam 2: The Statement on Standards in Personal Financial Planning Services No8 Questions
Exam 3: Time Value of Money Concepts7 Questions
Exam 4: Fundamentals of Personal Financial Planning8 Questions
Exam 5: Estate Planning Basics8 Questions
Exam 6: Charitable Gift Planning Basics8 Questions
Exam 7: Principles of Risk and Insurance8 Questions
Exam 8: Insurance Planning Basics7 Questions
Exam 9: Insurance Planning Basics8 Questions
Exam 10: Investment Basics8 Questions
Exam 11: Investment Planning8 Questions
Exam 12: Planning for Retirement and Financial Independence7 Questions
Exam 13: Planning Vehicles for Retirement8 Questions
Exam 14: Elder Planning Basics8 Questions
Exam 15: Education Planning Basics8 Questions
Exam 16: Applications in Estate Planning8 Questions
Exam 17: Applications in Risk Management8 Questions
Exam 18: Applications in Investment Planning8 Questions
Exam 19: Applications in Planning for Retirement8 Questions
Exam 20: Applications in Employee Benefits Planning8 Questions
Exam 21: Applications in Executive Compensation Planning8 Questions
Exam 22: Applications in Personal Financial Planning in Special Circumstances8 Questions
Exam 23: Delivery Models and Regulatory Issues8 Questions
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A client wants the IRR to be ________ or ________ the client's required rate of return.
Free
(Multiple Choice)
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Correct Answer:
A
Kim and Doug Richards are making a gift to the college they both attended.They met and were married there,as well.They plan to make a $1 million gift,from which they will draw $150,000 of annual income for five years.At the end of the fifth year,the balance of the investment,$500,000,will go to the college.What return does the college need to achieve in order to meet the financial goal of $500,000?
Free
(Multiple Choice)
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Correct Answer:
B
Stephanie purchased an antique necklace six years ago for $300 as an investment.The clasp was repaired at the end of the second year for $150.The repaired necklace has just sold at auction for $850.What is the average compound annual rate of return that was earned by investing in this collectible?
Free
(Multiple Choice)
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Correct Answer:
C
Your prospective client plans to purchase an automobile with a total "drive-out" cost of $32,000.The down payment will be $5,000.The balance of the purchase price will be financed at an annual interest rate of 3.5 percent for a period of five years.What will be the annual payments to the lender?
(Multiple Choice)
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Brad Smith is considering the purchase of a REIT.The REIT's prospectus projects positive cash flows for Years 1,2,and 3 of $6,000,$7,000,and $8,000,respectively.At the end of three years,Brad anticipates he will sell the REIT for $115,000.He wants to make a return of at least 6 percent.How much should he pay for the REIT?
(Multiple Choice)
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A prospective PFP client comes to you with an investment statement.The first page of the statement,which contained the initial investment amount of a mutual fund purchased five years ago,is missing,and as a result the initial cash flow is -0-.The initial investment of the mutual fund can be determined based on the following information provided in the investment statement.The statement indicates that the five-year return for the investment was 10 percent.
Year 1: capital gain and dividend were $100
Year 2: capital gain and dividend year were $150
Year 3: no capital gain or dividend paid and the client invested $1,000
Year 4: no capital gain or dividend paid
Year 5: no capital gain or dividend paid and the client sold out of his position for $18,000
(Multiple Choice)
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Darren and Alice Johnson are in the information technology consulting business.Alice's father just passed away and left her $100,000.They are considering investing her inheritance in a server farm owned by one of their clients.The client has a cash flow problem and has offered the Johnsons the following investment proposal: purchase an investment interest for $100,000 today;receive cash distributions of $6,000,$7,000,and $8,000 respectively over the next three years;and at the end of the third year the owner will purchase back the interest in the server farm for $115,000.Even though the owner is a client the Johnsons trust,they consider the investment to be risky.Darren and Alice feel that they should earn at least 12 percent on the investment in order to be fairly compensated for the investment risk.Should the Johnsons invest in the server farm?
(Multiple Choice)
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