Phase 1 Exam Review
25 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
– 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
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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