Phase 1 Exam Review 25 M/C, 25 T/F Questions 3 Time Value of Money Problems Chapters Personal Financial Planning FIN 235

Chapter 1 Personal Financial Planning in Action Keys to Personal Financial Success – Objectives: Financial & Career Planning Tax Planning Risk Management – Importance of spending less than you earn – Effects of Inflation (CPI measure), GDP Time Value of Money Problems (4 Extra Credit)

Chapter 2 Career Planning Importance of Career Planning – Links to life time income potential – Identifying Career opportunities – Importance of resume and cover letters Key phrases – targeting cover letter – Managing credit profile – Continuing Education

Chapter 3 Financial Statements, Budgets Importance of Goals and Personal Values – Setting Financial Goals (being specific) Spending Capital Accumulation Risk Management – Personal Balance Sheet Assets Liabilities Net Worth = Assets - Liabilities – Cash Flow Statement Income Expenses – Fixed – Variable – Disposable Income vs. Discretionary Income

Chapter 4 Managing Income Taxes Tax Terminology – Progressive – Regressive – Marginal Rates vs. Average Rate – Treatment of Short-Term vs. Long-term Gains – Managing Tax Burden Deductible expenses: itemizing vs. Standard Deduction – Use-it or Loose-It accounts – Tax Forms: 1040EZ, 1040A, 1040, 1040X

Chapter 5 Managing Checking & Savings Importance of Liquidity Mutual S&Ls, Credit Unions Meeting Daily Money Needs – Debit cards: immediate deductions from checking account – Credit cards: deferred payments – Demand deposit (Checking, NOW) – Time deposits (CD’s) Monetary Assets Liability limits for lost credit cards – $50 <= 2 days, $500 <= 60 days FDIC Insurance limits ($250K)

Time Value of Money Future value of an amount saved – FV = Amount x (1 + i) n Present value of an amount to be received – PV = Amount ÷ (1 + i) n Future value of a series of equal deposits – FVA = Deposit x FVIFA (future value interest factor for an annuity) – FVIFA = [ (1 + i)n – 1] ÷ I i = Annual rate ÷ number of compound periods per year n = Number of years x number of compound periods per year