CRPC EXAM 2024-2025 ACTUAL EXAM 180 QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES (VERIFIED ANSWERS) |ALREADY GRADED A+
Mary Goodwin's financial situation is as follows:
Cash/cash equivalents$15,000
Short-term debts$8,000
Long-term debts$133,000
Tax expense $7,000
Auto note payments $4,000
Invested assets $60,000
Use assets $188,000
What is her net worth? - correct answer Assets = $263,000; liabilities = $141,000,
so net worth is $122,000. Taxes and auto note payments appear on the cash flow
statement. 1-3
Salaries$70,000
Auto payments$5,000
Insurance payments$3,800
Food$8,000
Credit card balance$10,000
Dividends$1,100
Utilities$3,500
Mortgage payments$14,000
Taxes$13,000
Clothing$9,000
Interest income$2,100
Checking account$4,000
Vacations$8,400
Donations$5,800
,CRPC EXAM 2024-2025 ACTUAL EXAM 180 QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES (VERIFIED ANSWERS) |ALREADY GRADED A+
What is the cash flow surplus or (deficit) for Bill? - correct answer Income =
$70,000 + $1,100 + $2,100 = $73,200. Expenses = $5,000 + $3,800 + $8,000 +
$3,500 + $14,000 + $13,000 + $9,000 + $8,400 + $5,800 = $70,500, so there is a
surplus of $2,700. The checking account and credit card balances would be on the
statement of financial position.
LO 1-3
correct statements about income replacement percentages - correct answer
Income replacement percentages are typically much higher for those with lower
preretirement incomes.
Income replacement percentages vary between low-income and high-income
retirees.
Income replacement ratios should not be used as the only basis for planning.
Income replacement ratios are useful for younger clients as a guide to their long-
range planning and investing.
The inverse of Option I is true. Those with a lower preretirement income typically
need a much higher income replacement percentage in retirement.
LO 1-4
If Tom and Jenny want to save a fixed amount annually to accumulate $2 million
by their retirement date in 25 years (rather than an amount that grows with
inflation each year), what level annual end-of-year savings amount will they need
to deposit each year, assuming their savings earn 7% annually? - correct answer
Set your calculator to the "End" mode and "1 P/Yr." Inputs: FV = 2000000, I/YR =
7, N = 25, PV = 0, then PMT = $31,621
,CRPC EXAM 2024-2025 ACTUAL EXAM 180 QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES (VERIFIED ANSWERS) |ALREADY GRADED A+
1-4
Bill and Lisa Hahn have determined that they will need a monthly income of
$6,000 during retirement. They expect to receive Social Security retirement
benefits amounting to $3,500 per month at the beginning of each month. Over
the 12 remaining years of their preretirement period, they expect to generate an
average annual after-tax investment return of 8%; during their 25-year retirement
period, they want to assume a 6% annual after-tax investment return
compounded monthly. They want to start their monthly retirement withdrawals
on the first day they retire.
What is the lump sum needed at the beginning of retirement to fund this income
stream? - correct answer The monthly retirement income need is not specified as
"today's dollars," and no inflation rate specified; therefore, it must be assumed
that the $2,500 net monthly income need represents retirement dollars, and the
retirement period income stream is level. To calculate the lump sum needed at
the beginning of retirement, discount the stream of monthly income payments at
the investment return rate:
10BII+ PVAD calculation:
Set calculator on BEG and 12 periods per year, then input the following:
2,500 [PMT]
25 [SHIFT] [N]
6 [I/YR]
0 [FV]
Solve for PV = $389,957
LO 1-4
Chris and Eve Bronson have analyzed their current living expenses and estimated
their retirement income need, net of expected Social Security benefits, to be
$90,000 in today's dollars. They are confident that they can earn a 7% after-tax
, CRPC EXAM 2024-2025 ACTUAL EXAM 180 QUESTIONS AND CORRECT DETAILED ANSWERS WITH
RATIONALES (VERIFIED ANSWERS) |ALREADY GRADED A+
return on their investments, and they expect inflation to average 4% over the long
term.
Determine the lump sum amount the Bronsons will need at the beginning of
retirement to fund their retirement income needs, using the worksheet below.
(1) Adjust income deficit for inflation over the preretirement period:$
90,000present value of retirement income deficit25number of periods until
retirement4%% inflation rateFuture value of income deficit in first retirement
year$239,925
(2) Determine retirement fund needed to meet income deficit:$239,925payment
(future value of income deficit in first retirement year)30number of periods in
retirement
The lump sum needed at the beginning of the - correct answer This PVAD
calculation requires that the calculator be set for beginning-of-period payments.
First, the annual retirement income deficit is expressed in retirement-year-one
dollars, resulting in a $239,925 income deficit in the first retirement year. This
income deficit grows with inflation over the 30-year retirement period, and the
retirement fund earns a 7% return.
The calculator inputs are
$239,925, [PMT];
30, [N];
2.8846, [I/YR]. (1.07/1.04)-1 x100
Solve for [PV],
