The Rolands have come to see you on January 2. Neil, age 51, is an anesthesiologist and his wife, Harriet, age 51, is a lawyer. Neil has a practice at the hospital and shares an office with a partner in a nearby medical building. Neil and his partner conduct business as Roland and Shad, LLP. Harriet works for a medium size law firm and is the managing partner.

Neil and Harriet have been married for 23 years, and they have three children ages 22, 20 and 10. The Rolands have already set aside sufficient assets for an education fund for their children. The Rolands own their own home which currently has a fair market value of $350,000. They have an unpaid mortgage balance of $100,000. The interest rate on the mortgage is 7.5%. Their monthly payment including principal, interest, taxes, and insurance is $1,400.

Neil has an annual net income of $300,000, and Harriet has an annual salary of $90,000. Their adjusted gross income is $390,000.

The Rolands have said and determined objective of $260,000 in annual income. This amount is pretax and based on today's purchasing power. Neil currently has $800,000 dollars in his account in a SEP plan established by the partnership. The SEP plan is for Neil, his partner, and therefore other employees. Neil also has an IRA account balance of $60,000. Harriet has $180,000 in a 401(k) plan which allows her to make an elective deferrals of up to 10% of her salary. The plan will match 50% of her deferrals up to 6% of income. Harriet is the beneficiary of Neil's retirement accounts, and Neil is the beneficiary of Harriet's retirement accounts.

Neal and Harriet are planning to retire when Neil is 66 (one year before full retirement age). They expect that inflation will average 3.5% both before and after they retire. They're both in excellent health and expect to live to age 90. They have invested their retirement funds and assets that have earned returns averaging 14% over the past four years. Expect their assets will earn approximately 11% annually until they both retire. After retirement, they expect that their investment returns will drop to approximately 8% annually. These returns are estimated on a pretax basis. The Rowlands have received from the social security administration statements of their earnings and estimate of future benefits showing that each of them will receive Social Security benefits of approximately $15,000 annually when they retire.

Harriet's mother, Elain, will be 71 years of age on August 1 first of this year. She is a widow and receives monthly Social Security payments of $1,000 as well as a pension of $1,750 monthly. On December 31 of the previous year, the account was valued at $170,000. She has Harriet as the beneficiary of the IRA. She works part-time for Neil in his office and earns $15,000 per year. Neil does not make a Keogh contribution for her.

1- What is the total amount Harriet can contribute into her 401(k) during 2020, including the amount from the employer match?

Group of answer choices

$19,500

$26,000

$11,700

$16,700

2-If Neil retires at age 70, what is the approximate amount of Social Security benefit that he will receive on an annual basis (using today's dollars)?

Group of answer choices

$19,850

$18,600

$15,000

$16,500

3-If Elaine has taken on the minimum required distributions from her IRA and the balance is $225,000 on December 31 of this year, what will be the approximate amount of Elaine's required minimum distribution from the IRA next year? Hint: use the Uniform Table from the distributions lecture.

Group of answer choices

$10,600

$12,500

$7,500

$8,789

4- If Elaine begins taking minimum distributions form her IRAs and then dies two years later, what is the minimum distribution rule that will most likely govern how the remaining account balance in Elaine's IRA will be distributed to Harriet?

Group of answer choices

The account balance must be distributed within 10 years beginning by December 31 of the year after Elaine died

The account balance can be distributed to Harriet at least as rapidly as it was being distributed to Elaine

The account balance must be distributed to Harriett based on her life expectancy beginning in the year following the year of Elaine's death.

The account balance must be distributed within 5 years beginning by December 31 of the year after Elaine died

Evaluate the following project using an IRR criterion, based on a 10% opportunity cost of capital: CFO = -$6,000 CF1 = $3,300 CF2 - $3,600 O Reject: because the IRR exceeds the opportunity cost Accept: because the opportunity cost exceeds the IRR O Reject: because the opportunity cost exceeds the IRR O Accept: because the IRR exceeds the opportunity cost Question 27 4 pts What is the coupon rate for a bond with a face value of $1.000, 5 years to maturity, a current price of $955.48, and a yield to maturity of 4%? 6% 0 4% 0 5% 3%QUESTION 3 When resources are perfectly shiftable between the production of two different goods, then the PPF model will have a(n) Oa. No Opportunity Cost Ob. Increasing Opportunity Cost Oc. Decreasing Opportunity Cost d. Constant Opportunity Cost QUESTION 4 A manufacturing facility that produces shoes is classified under Oa. Financial Capital Ob. Land Oc. Economic Capital Od. Labor QUESTION 5 A company develops a new database program for itself that can be implemented by other firms and will improve their productivity. This is an example of a. Negative Externality O b. Positive Externality Oc Transfer Payments Od. Tax LoopholesQuestion 4 {1 point] 1ili'hich statement best states the reason social planners problem produces the some outcome as the market equilibrium outcome in perfect competitive market? 0 Social value = private i-'alue= Social cost = private cost 0 QB = Q3 0 The power of perfect competition 0 Individuals rational decision making and consideration of oppommitjr cost Question 5 {1 point) What is the deference between technological patented knowledge and general knowledge? 0 General knowledge creation is usuallyr more protable for the creator. 0 Technological knowledge is excludable and general knowledge is not. 0 General knowledge is excludahle and technological knowledge is not. 0 General knowledge is rival in consumption and technological knowledge is not Question 7 (10 points) Saved For 3 of the following, define and briefly describe the benefits and drawbacks of each approach: (1) command-and-control, (2) taxation, (3) tradable permits, and (4) moral suasion. command and control - taxation - tradable permits - moral suasion -What is the "price" of money? One dollar The interest rate O A transaction cost The opportunity cost QUESTION 24 BONUS: In a market setting, if the demand for digital video recorders increases, we can expect that there will eventually be... O a reduction in the price of digital video recorders. O a reduction in the quantity of digital video recorders supplied by producers. O more digital video recorders produced. O a shortage of digital video recorders