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Phase 1 Exam Review 2 5 M/C, 25 T/F Questions 3 Time Value of Money Problems Chapters 1 - 5

Phase 1 Exam Review 2 5 M/C, 25 T/F Questions 3 Time Value of Money Problems Chapters 1 - 5. 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

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Phase 1 Exam Review 2 5 M/C, 25 T/F Questions 3 Time Value of Money Problems Chapters 1 - 5

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  1. Phase 1 Exam Review25M/C, 25 T/F Questions3 Time Value of Money ProblemsChapters 1 - 5 Personal Financial Planning FIN 235

  2. Chapter 1Personal 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)

  3. Chapter 2Career 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

  4. Chapter 3Financial 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

  5. Chapter 4Managing 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

  6. Chapter 5Managing 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)

  7. 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

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