Concept explainers
a
Case summary:H’s family us experiencing some financial pressures, even though the couple has combined income of $85,000, it is determined that, increment of income is required for emergency fund needs, and they required to save $30,000 annually at 3 percent return. With 25 percent of marginal tax rate they are required to save $9,782 annually. To save annually some of the best available saving options have been discussed.
Characters in the case : MH and JH
Adequate information:H family is experiencing financial pressure, MH is contemplating going to work full time. It is required to determine the effect of family income on emergency fund needs, if they consider to build the college fund to $30,000 how much annual savings they require, if the marginal tax rate is 25 percent how much savings would reduce the effects on taxes.
To determine: Addition of $32,000 to family annual income will affect family’s emergency fund.
Introduction:
Monetary asset management:Is to see that best possible interest earnings and minimizing fees on all of you funds that are available for everyday living expenses, emergencies, savings, and investment opportunities. An effective monetary asset management allows you to earn interest on your money while maintaining adequate liquidity and safety.
b
Case summary:H’s family us experiencing some financial pressures, even though the couple has combined income of $85,000, it is determined that, increment of income is required for emergency fund needs, and they required to save $30,000 annually at 3 percent return. With 25 percent of marginal tax rate they are required to save $9,782 annually. To save annually some of the best available saving options have been discussed.
Characters in the case : HJ and BJ
Adequate information:H family is experiencing financial pressure, MH is contemplating going to work full time. It is required to determine the effect of family income on emergency fund needs, if they consider to build the college fund to $30,000 how much annual savings they require, if the marginal tax rate is 25 percent how much savings would reduce the effects on taxes.
To determine: The amount of savings required annually for next three year to build $30,000 at an assumed rate of 3 percent.
Introduction:
Monetary asset management:Is to see that best possible interest earnings and minimizing fees on all of you funds that are available for everyday living expenses, emergencies, savings, and investment opportunities. An effective monetary asset management allows you to earn interest on your money while maintaining adequate liquidity and safety.
c
Case summary:H’s family us experiencing some financial pressures, even though the couple has combined income of $85,000, it is determined that, increment of income is required for emergency fund needs, and they required to save $30,000 annually at 3 percent return. With 25 percent of marginal tax rate they are required to save $9,782 annually. To save annually some of the best available saving options have been discussed.
Characters in the case : HJ and BJ
Adequate information:H family is experiencing financial pressure, MH is contemplating going to work full time. It is required to determine the effect of family income on emergency fund needs, if they consider to build the college fund to $30,000 how much annual savings they require, if the marginal tax rate is 25 percent how much savings would reduce the effects on taxes.
To determine: The effect of 25 percent marginal tax rate on after tax returns of H’s savings.
Introduction:
Monetary asset management:Is to see that best possible interest earnings and minimizing fees on all of you funds that are available for everyday living expenses, emergencies, savings, and investment opportunities. An effective monetary asset management allows you to earn interest on your money while maintaining adequate liquidity and safety.
d
Case summary:H’s family us experiencing some financial pressures, even though the couple has combined income of $85,000, it is determined that, increment of income is required for emergency fund needs, and they required to save $30,000 annually at 3 percent return. With 25 percent of marginal tax rate they are required to save $9,782 annually. To save annually some of the best available saving options have been discussed.
Characters in the case : HJ and BJ
Adequate information:H family is experiencing financial pressure, MH is contemplating going to work full time. It is required to determine the effect of family income on emergency fund needs, if they consider to build the college fund to $30,000 how much annual savings they require, if the marginal tax rate is 25 percent how much savings would reduce the effects on taxes.
To determine: The saving options for H that could reduce the effect of taxes on their savings program.
Introduction:
Monetary asset management:Is to see that best possible interest earnings and minimizing fees on all of you funds that are available for everyday living expenses, emergencies, savings, and investment opportunities. An effective monetary asset management allows you to earn interest on your money while maintaining adequate liquidity and safety.
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EBK PERSONAL FINANCE TAX UPDATE
- Michiko and Saul are planning to attend the same university next year. The university estimates tuition, books, fees, and living costs to be 12,000 per year. Michikos father has agreed to give her the 12,000 she needs to attend the university. Saul has obtained a job at the university that will pay him 14,000 per year. After discussing their respective arrangements, Michiko figures that Saul will be better off than she will. What, if anything, is wrong with Michikos thinking?arrow_forwardAmount of Insurance Needed. Peter is married and has two children. He wants to be sure that he has sufficient life insurance to take care of his family if he dies. Peter's wife is a homemaker but attends college part-time pursuing a law degree. It will cost approximately $40,000 for her to finish her education. Because the children are teenagers, Peter feels he will only need to provide the family with income for the next ten years. He further calculates that the household expenses run approximately $61,600 per year excluding the mortgage payments. The balance on the home mortgage is $ 125,000. Peter set up a college fund for his children when they were babies, and it currently contains sufficient funds for them to attend college. Assuming that Peter's wife can invest the insurance proceeds at 9%, calculate the amount of insurance Peter needs to purchase. The amount of life insurance Peter would need to purchase is?arrow_forwardbut tion Johnny wants to save some money for his daughter Alexis's education. Tuition costs $12,500 per year in today's dollars. Alexis was born today and will go to school starting at age 18. She will go to school for 4 years. Johnny can earn 11% on his investments and tuition inflation is 7%. How much must Johnny save at the end of each year, if he wants to make his last savings payment at the beginning of his daughter's first year of college? O a. $2,694.56. b. $2,789.04. X OC. $2,861.65. O d. $3,176.43.arrow_forward
- Parents wanted to save enough money to send their daughter to college. The parents were unable to save money right at birth but rather started saving money when she was 5 years old and will save until she is 18 years old. The parents would like to save up $75,000 to cover tuition and other expenses. How much would the parents need to save each month in order to meet this requirement Assume the parents save the money into an account that generated an interest of 2% per year O a $360 O b. 3370 Oc$400 Od $490arrow_forwardLike many married couples, Morgan and Thomas Jensen are trying their best to save for two important investment objectives: (1) an education fund to put their two children through college; and (2) a retirement nest egg for themselves. They want to set aside $100,000 per child by the time each one starts college. Given that their children are now 10 and 12 years old, Morgan and Thomas have 6 years remaining for one child and 8 for the other. As far as their retirement plans are concerned, the Jensens both hope to retire in 20 years, when they reach age 65. Both Morgan and Thomas work, and together, they currently earn about $90,000 a year. The Jensens started a college fund some years ago by investing $6,000 a year in bank CDs. That fund is now worth $67,000 (assume that the fund is split in half for each child). They also have $52,000 that they received from an inheritance invested in several mutual funds and another $22,000 in a tax-sheltered retirement account. Morgan and Thomas…arrow_forwardYour parents will retire in 18 years. They currently have $250,000 saved, and they think they will need $1,000,000 at retirement. What annual intrest rate must they earn to reach their goal, assuming they don't save any additional funds?arrow_forward
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- belinda and harry have discussed starting a family but decided to wait for perhaps five more years in order to get their careers moving along well and getting their personal finances solidly on the road to success.they also know that having children is expensive. the government's figure is extra expense of a child would be $16,000 a year through high school graduation. how much money will they likely cumulatively spend on a child over 18 years assuming a 3 percent inflation rate?arrow_forwardDirections: Answer the following questions. Provide necessary computations. 1. The Madrigal family is experiencing some financial pressures, even though the couple has a combined income of P1,236,000 per annum. Their home loan will start this year and their eldest daughter, Julieta, will start college in only three years. Alma is contemplating saving for this coming year and told her husband, Pedro, to plan for an emergency fund. Alma's monthly salary is P29,000. a) How much should be the three-month emergency funds of Alma? b) How much should be the three-month emergency funds of Pedro? c) If the couple decided to have five-month emergency funds, how much should be their combined emergency funds?arrow_forwardto help George and Jude Sullivan determine how much they need to retire early in about 20 years. Both have promising careers, and both make good money. As a result, they’re willing to put aside whatever is necessary to achieve a comfortable lifestyle in retirement. Their current level of household expenditures (excluding savings) is around $75,000 a year, and they expect to spend even more in retirement; they think they’ll need about 125 percent of that amount. (Note: 125 percent equals a multiplier factor of 1.25.) They estimate that their Social Security benefits will amount to $20,000 a year in today’s dollars and that they’ll receive another $35,000 annually from their company pension plans. George and Jude feel that future inflation will amount to about 3 percent a year, and they think they’ll be able to earn about 6 percent on their investments before retirement and about 4 percent afterward. Find out how big their investment nest egg will have to be and how much they’ll have…arrow_forward
- Pfin (with Mindtap, 1 Term Printed Access Card) (...FinanceISBN:9780357033609Author:Randall Billingsley, Lawrence J. Gitman, Michael D. JoehnkPublisher:Cengage Learning