Discussion Questions

READ AND RESPOND TO EACH of the numbers. You are either answering the question being asked or responding to an answer to a question. Please elaborate as much as possible and minimums word count of 60. DO NOT put in essay format, just answer the question in number format. 1) In week one, we discussed the present and future value. The present and future value are the time value of money computations. For first message 2.1, compute the future value of a 401k balance. Currently, the 401k balance is $100,000. The student is considering keeping the 401k invested for 20, 25, 30, or 35 years. If the 401k is invested at 8%, what is the future value of the 401k in 20, 25, 30, and 35 years? 2) The single sum present value and single sum future value are the time value of money computations. What is the relationship between the interest rate and the future value? Provide an example. 3) Chapter 3 discussed the taxes and all of the ways taxes are applied, depending on a individuals financial income. There are different types of taxes, taxes on purchases, taxes on property , taxes on wealth, inheritance taxes. Knowing exactly which category you fall under is imperative, in order to understand how much taxes will be with held from you. Although there are four major forms of taxes there are also numerous types of income that coincides with adjusted gross income. The first step towards adjusted gross income is taxable income, which then categorizes the different income for taxes. Earned income , investment income , passive income. Chapter 3 also discussed other types of federal income subject to taxes, alimony, lottery winnings etc. This chapter outlined all of the different ways taxes are done or determined, I now have a better understanding on taxes. Most importantly I better understand which tax category I fall under. 4) What are the four main types of financial services? What kind of financial services will help you accomplish your short, intermediate, and long-term goals? For example, I use savings financial services for my emergency accounts and savings accounts. Align a type of financial service with your short, intermediate, and long-term goals that you established in week one. Share your examples with the class. 5) Good morning class, In our class, we will write sections of a personal financial plan. Also, we will review concepts necessary for preparing a financial plan. In week one, the class wrote short, intermediate, and long-term financial goals. In week two, you will align those financial goals with financial institutions. Refer to Exhibit 4-1. What are the six types of the financial services? Which financial services will support your short, intermediate, and long-term goals? You may select more than one financial service for your short, intermediate, and long-term financial goals. For instance, you may select savings services for your savings account and emergency account short-term financial goals. Share your answers with the class. James 6) Define and describe the rule of 72 as well as opportunity cost. How may you apply the Rule of 72 and opportunity cost in your financial plan? 7) Rule 72 is a simple, valuable tool to estimate how long does it may take to double your investment as a function of the interest rate. Rule 72 is a simple, valuable tool to estimate how long does it may take to double your investment as a function of the interest rate. # of Years = 72/Interest Rate Note: 72 is a constant hence it never changes. Example: How many years it would take me to double my investment if the interest rate is 10% Ans. 72/10 = 7.2 Years Opportunity Cost is an understanding that if one has a fixed amount of money and he desires to buy multiple items, and the total sum exceeds his/her budget he has to understand that something must give, to not exceed his budget. Example: if I wish to buy three shirts and five pairs of socks within my budget I may have to buy two shirts and five pairs of socks or three shirts and two pairs of socks.

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