Chapter 2 Financial Planning Problems

Matthew Ramirez

BNF-102-098WB

Prof. Deane

28 January 2022

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

Liquid assets, $3,870 Current liabilities, $2,670 Long-term liabilities, $76,230 Investment assets, $8,340 Household assets, $87,890

a. Total assets $ _____

b. Total liabilities $ _____

c. Net worth $ _____ 4. For each of the following situations, compute the missing amount.

a. Assets $65,000; liabilities $18,000; net worth $ _____

b. Assets $86,500; liabilities $ _____ ; net worth $18,700

c. Assets $34,280; liabilities $12,965; net worth $ _____

d. Assets $ _____ ; liabilities $38,345; net worth $52,654

6. The Fram family has liabilities of $128,000 and a net worth of $340,000. What is their debt ratio? How would you assess this?

9. The Brandon household has a monthly income of $5,630 on which to base their budget. They plan to save 10 percent and spend 32 percent on fixed expenses and 56 percent on variable expenses.

a. What amount do they plan to set aside for each major budget section?

Savings $ _____

Fixed expenses $ _____

Variable expenses $ _____

b. After setting aside these amounts, what amount would remain for additional savings or for paying off debts?

11. Use future value and present value calculations (see tables in the appendix for Chapter 1) to determine the following:

a. The future value of a $600 savings deposit after eight years at an annual interest rate of 6 percent.

b. The future value of saving $1,800 a year for five years at an annual interest rate of 5 percent.

c. The present value of a $2,000 savings account that will earn 3 percent interest for four years.