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Focus on Personal Finance, 7e Jack Kapoor, Les Dlabay, Robert Hughes, Melissa Hart (Solutions Manual) (Download link at the end of this file) 1 / 2
Copyright © 2020 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
Problems Chapter 1 - SOLUTIONS
(Note: Some of these problems require the use of the time value of money tables in the chapter appendix, a financial calculator, or spreadsheet software.)
- Using the rule of 72, approximate the following amounts. (LO 1.1)
- If the value of land in an area is increasing 6 percent a year, how long will it take for property
values to double?
About 12 years (72 / 6)
- If you earn 10 percent on your investments, how long will it take for your money to double?
About 7.2 years (72 / 10)
- At an annual interest rate of 5 percent, how long will it take for your savings to double?
About 14.4 years (72 / 5)
- In 2019, selected automobiles had an average cost of $16,000. The average cost of those same
automobiles is now $20,000. What was the rate of increase for these automobiles between the two time periods? (LO 1.1)
($20,000 - $16,000) / $16,000 = .25 (25 percent)
- A family spends $46,000 a year for living expenses. If prices increase by 3 percent a year for the
next three years, what amount will the family need for their living expenses after three years? (LO 1.1)
46,000 1.09 = $50,140; or using Exhibit 1-A: $46,000 1.093 = $50,278
- Ben Collins plans to buy a house for $260,000. If the real estate in his area is expected to increase
in value by 2 percent each year, what will its approximate value be seven years from now? (LO 1.1)
$260,000 1.149 = $298,740; or using Exhibit 1-A: $260,000 1.149 = $298,740
- What would be the yearly earnings for a person with $9,000 in savings at an annual interest rate of
1.5 percent? (LO 1.3)
$9,000 0.015 = $135
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