QUIZ AND ASSIGNMETS

University of Phoenix Material

Personal Finance Problems – Week 2

Read the Case in Point “A Little Becomes A Lot” in Ch. 2 of the text.

Answer the following as a team:

· If Ken really saved $0.25 per week, what return would he have had to earn over 25 years to accumulate $30,000? If you assume a more realistic return of 12% per year, how much would he have to save per week? Answer Questions 1–3 at the end of the case.

Answer the following as a team:

· Roberto has $20,000 in an investment account at his brokerage, invested to earn an expected 13% over the coming 5 years. He is buying an engagement ring for his fiancée, Sarah that costs $12,500. He is considering borrowing the cost of the ring on his credit card that charges him 18% and paying it back over 5 years. Using TVM calculations compare the direct cost of borrowing on the credit card versus the opportunity cost of selling some investments from his brokerage account.

Answer the following as a team:

Using Exhibit 11-2 in Ch. 11, how do the factors identified in the graphic help determine the level of risk an investor might want to assume?