
Formula to determine future value of annual deposits.
FV=PMT × FV annuity table factor

Formula to determine salary for cost of living.
Current salary × (1 + Cost of living increase)

Formula for tax equivalent value
Nontaxable amount / ( 1 – Tax rate)

Determine salary after many raises
Current salary × FV single sum table factor

Formula for aftertax value
Pretax value × (1 – Tax rate)

Formula to determine job value
Salary + Nontaxable benefits / (1 – Tax rate)

Determine total assets
Liquid assets + Investment assets + Household assets

Determine total liabilities
Current liabilities + Longterm liabilities

Determine net worth
Total assets − Total liabilities

Determine debt ratio
Liabilities / Assets

What is a desirable debt ratio?
2.0

Determine surplus/deficit
Budgeted amount − Actual amount

Formula to determine budget for inflation
PV × FV single sum table factor

Determine future value of single deposit
PV × FV single sum table factor

Determine taxable income
Gross 56145
interest earnings 205
Dividend income 65
Standard deduction 12000
Itemized deduction 11250
Adjustments to
income 1200
$56,145 + $205 + $65 − $1,200 − $12,000

If Lola Harper had the following itemized deductions, should she use Schedule A or the standard deduction? The standard deduction for her tax situation is $12,000.
If Lola Harper had the following itemized deductions, should she use Schedule A or the standard deduction? The standard deduction for her tax situation is $12,000.
Donations to church and other charities $6,050
Medical and dental expenses exceeding 10 percent of adjusted gross income 2,400
State income tax 4,690
$6,050 + $2,400 + $4,690

Determine tax decduction threshold amount
Adjusted gross income × Threshold rate

Determine deductible amount
Qualified medical expenses – Threshold amount

Determine average tax rate
Total tax / Taxable income

Determine taxable income
Adjusted gross income – Standard deduction

Determine income tax
Tax rate × Taxable income

Determine total tax liability
Income tax – Tax credits

determine taxes due
Tax liability – Taxes paid

Determine upcoming exemption
Tax liability – Taxes paid

Determine lost annual income.
If 400,000 people each receive an average refund of $2,450, based on an interest rate of 3 percent, what would be the lost annual income from savings on those refunds?
Number of people × Average refund × Interest rate

Determine interest rate for a two week period
Rate per period × Number of periods per year = rate × (52 weeks / 2 weeks)

Determine annual interest
Annual interest rate × Investment

Determine penalty for withdrawing investment 2 mo early
2 months of interest = (2 / 12) × Annual interest = (2 / 12) × $800

determine aftertax yield
Pretax yield × (1 − Tax rate)

Determine APY
100 (Interest / Principal)

Determine annual opportunity cost
Minimum balance × Interest rate

What is the last step before accepting a job position
Evaluate finacial and other factors of the job

Jared needs to develop a resume. He has a diverse set of skills and time gaps within his experience and work history. He is looking to develop this type of resume because he recently changed careers. Which type of resume is Jared looking for?
Functional Resume

Callie is looking to develop a resume. She is looking for a resume that is designed for a specific job and highlights the capabilities and experiences most appropriate to the position she is applying for. Which type of resume is Callie looking for?
Targeted resume

How should the assets you own be reported in your personal balance sheet?
At the actual or estimated current value of the asset

The __________________ ratio compares your liquid assets to your current liabilities.
Current

Determine savings ratio
Savings Ratio = Monthly Savings/Gross Income

Determine debt payment ratio
Monthly Credit Payments/TakeHome Pay

Grace saved $3,000 by using a tax credit. Assume Grace is in a 25% tax bracket. What is the amount of her tax credit?
$3,000

Jacob contributed $2,200 to charity within this past year, which qualifies for a tax deduction. Tucker saved $2,200 with a tax credit within this past year. Assume both Jacob and Tucker are in a 20% tax bracket. What is the difference between Tucker’s tax credit and Jacob’s tax deduction?
$1,760

________________________ is the use of illegal actions to reduce your taxes, where as ________________________ is the use of legitimate methods to reduce one’s taxes.
Tax evasion; tax avoidance

Retirees also have varying amounts of social security that is taxed based upon the amount of their income. In some cases, the difference can vary between _____ and _____ being taxed.
50%; 85%

Investments held for less than one year will be taxed at ___________________________, whereas investments that have been held for over one year are taxed at ____________________________.
Ordinary income rates; capital gains rates

Dean initially invested $3,150 in a company and has held this investment for four years. Dean sold the investment after four years for $5,575. Assuming he is in the 25% tax bracket, what is his capital gains tax?
$363.75


advantages of prepaid cards, except:Multiple Choice
unlimited spending

___________________ individuals are those who have bank accounts, but still use highcost financial service companies.
Underbanked

Will is currently in a 22% tax bracket and has a 7.2% savings rate of return. What is his aftertax savings rate of return?
Step 1: Determine your top (marginal) tax rate = 22%
Step 2: Subtract your tax rate from 1.0 = 1.0 – 0.22 = 0.78
Step 3: Multiply the yield on your savings account with step 2 answer.
= 0.072 x 0.78 = 5.62%

