TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD
OWNER: EMILLYCHARLOTTE
COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISHED: SEPTEMBER 2024
Crpc Exam 2024-2025 Actual Exam 180 Questions And
Correct Detailed Answers With Rationales
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? - 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
Page 1 of 165
,TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD
OWNER: EMILLYCHARLOTTE
COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISHED: SEPTEMBER 2024
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
What is the cash flow surplus or (deficit) for Bill? - 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 - 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.
Page 2 of 165
,TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD
OWNER: EMILLYCHARLOTTE
COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISHED: SEPTEMBER 2024
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? - 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
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.
Page 3 of 165
, TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD
OWNER: EMILLYCHARLOTTE
COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED
FIRST PUBLISHED: SEPTEMBER 2024
What is the lump sum needed at the beginning of retirement to fund this income
stream? - 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 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.
Page 4 of 165
