Question 1 Pat and Marie have the following expenses and account balances. Pat’s annual 401(k) plan contribution $16,500 Pat’s annual salary $100,000 Current liabilities $24,000 Housing costs (P&I&T&I) monthly $2,167 Cash & Cash equivalents $18,000 Monthly nondiscretionary cash flows $6,000 Monthly debt payments other than housing $500 Pat’s employer matches $1 for $1 up to 3% of Pat’s salary in his 401(k) plan. Their savings rate is:
Question 2 Jill would like to plan for her son’s college education. She would like for her son, who was born today, to attend college for 5 years, beginning at age 18. Tuition is currently $12,000 per year, and tuition inflation is 6%. Jill can earn an after¬tax rate of return of 8%. How much must Jill save at the end of each year if she wants to make the last payment at the beginning of her son’s first year of college?
Question 3 Tracy and Brett are married with the following financial situation. Current assets $9,243 Current liabilities $6,921 Monthly nondiscretionary expenses $4,693 Annual combined income $70,000 Annual debt payments (excluding monthly housing costs) $22,084 What is Tracy and Brett’s emergency fund ratio in months?
Question 4 Mrs. Escovido has come to you for advice on financing her son’s college education at a state university. Even though her income exceeds $200,000, she has not saved enough for his college expenses. You advise her that her best opportunity to acquire education funds would be through:
Question 8 Pat and Marie have the following expenses and account balances. Pat’s annual 401(k) plan contribution $16,500 Pat’s annual salary $100,000 Current liabilities $24,000 Housing costs (P&I and T&I) monthly $2,167 Cash & Cash equivalents $18,000 Monthly nondiscretionary cash flows $6,000 Monthly debt payments other than housing $500 Pat’s employer matches $1 for $1 up to 3% of Pat’s salary in his 401(k) plan. Based on the information above, calculate Pat and Marie’s housing ratio 1 in numbers.