CRPC PRACTICE EXAM 2 QUESTIONS WITH DETAILED ANSWERS // 100% GUARANTEED PASS A+ GRADED
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Course
CRPC
Institution
CRPC
Richard wants to have an annual retirement income of $100,000 (payable at the beginning of each year) protected against 3% inflation.
Assuming a 7% after-tax rate of return and a retirement period of 30 years, how much money does Richard need in order to meet his goal?
Explain how you need to...
, Richard wants to have an annual retirement income of $100,000 (payable at the
beginning of each year) protected against 3% inflation.
Assuming a 7% after-tax rate of return and a retirement period of 30 years, how much
money does Richard need in order to meet his goal?
Explain how you need to input this on the calculator and why. - ANS Step One - Set
the calculator to BEGIN.
ck
Step Two - Calculate the inflation adjusted rate of return (One plus the Rate of Return
divided by One plus the interest rate, minus one, multiplied by 100 = the inflation
adjusted rate of return) Put this number in the I/YR
Step Three - 100,000 goes in as a PMT
Step Four - 30 goes in as N
Step Five -Press PV lo
yc
Richard needs $1,822,042.88 in today's dollars to meet his needs.
How do you calculate the inflation-adjusted rate of return? - ANS 1 plus the Rate of
Return
ud
Divided by
1 plus the interest rate
minus one
st
multiplied by 100
Tom has been promised a stream of $40,000 annual payments at the end of each year
for 25 years. The present value of these payments discounted at a rate of 5% is which
one of the following amounts? - ANS Step One - The problem says END in it so you
have to set your calculator to the END mode.
Step two - Enter the $40000 as a PMT
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