QUESTION 1

Linda purchased a car three years ago. She paid $45,000 and financed it for 5 years at 2% annual interest with monthly payments. She decided to buy an SUV and sell her car. About how much is the loan balance on the car today?

		$18,541.26
		$18,173.98
		$ 17,976.46
		$17,385.94

1 points

QUESTION 2

Compute the expected portfolio return given:

Company Expected Return Weight

X -10% 30%

Y 30% 50%

Z 15% 20%

		21%
		18%
		15%
		-3%

1 points

QUESTION 3

A real estate duplex investment is available. The duplex is expected to pay out about $16,450 after-tax dollars a year. The duplex investment requires a $96,000 investment. Similar investments must earn 12% and would be held for 10 years.

Would the duplex investment be acceptable under the conditions given?

		Yes; the investment would earn about 13.03%.
		Yes; the investment would earn about 12.81%
		No; the investment would earn about 11.22%
		No; the investment would only earn about 9.08%.

2 points

QUESTION 4

Your client wants to spend $250,000 during each year in retirement. The client wants the money to last for 30 years. The client plans to invest $25,000 a year for 35 years and expects all investments to earn at least 6% a year. Will your client reach the goal of being able to spend $250,000 a year during retirement?

		Yes; the client will have exactly the right amount.
		Yes; the client will have about $169,372 more than needed in the retirement account.
		No; the retirement account will short about $1,524,318 (the client will need that much more in the retirement account to reach the goal).
		No; the client account will be short about $655,338 (the client will need about that much more in the retirement account to reach the retirement goal.

2 points

QUESTION 5

Is corporate Net Income cash? Why?

		Yes; you can spend Net Income
		Yes; you if convert it into the prevailing currency
		No; it is only spendable after the Income Statements are made public
		No; accrual accounting is used to make the Income Statement