Exam 1: Personal Financial Planning: An Introduction

Dani Roy wants to travel after she retires as well as pay off the balance of the loan she has on the home that she owns. Which step in the financial planning process does this situation demonstrate?

Your goal is to accumulate in 4 years $5,000. If you can earn a rate of 4%, compounded monthly, what will be your end of month monthly payment need to be to reach this goal?

The second step of the financial planning process is to

Assume your friend will pay you $200 for each of the next two years and $400 in years 3 and these amounts will be paid at year end. Assume the interest rate is 10% for the first two years and 12% for the next two (years 3 and 4). What is your friend's promise worth in today's dollars? (Round your answer)

Changes in interest rates don't affect your financial planning.

Risks associated with most financial decisions are fairly easy to measure.

Your goal is to accumulate in 4 years $5,000. What will be your end of month monthly payment need to be to reach this goal if the monthly compounded interest you earn is: A) 2% B) 4% C) 6% Use your financial calculator.