Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Related questions
Question
Home and Automobile Insurance
Newlyweds Joanne and James have had several milestones in the past year. They are newlyweds, recently purchased their first home and now have twins on the way! Joanne and James have to seriously consider their insurance needs. A family, a home and now babies on the way, they need to develop a risk management plan to help them should an unexpected event arise.
Current Financial Situation:
|
Assets (Joanne and James combined): |
|
|
Checking account |
$4,300 |
|
Savings Account |
$22,200 |
|
Emergency Fund savings account |
$20,500 |
|
Retirement Account balance |
$26,000 |
|
Car |
$10,000(JOANNE) $18,000(JAMES) |
|
Liabilities (Joanne and James combined): |
|
|
Student loan balance |
$0 |
|
Credit Card Balance |
$2,000 |
|
Car Loans |
$6,000 |
|
Income: |
|
|
· JOANNE : $50,000 gross income ($37,500 net income after taxes) · JAMES:$75,000 gross income ($64,000 net income after taxes) |
|
|
Monthly Expenses (Joanne and James combined): |
|
|
Mortgage |
$1,252 |
|
Property Taxes and Insurance |
$500 |
|
Utilities |
$195 |
|
Food |
$400 |
|
Gas/Maintenance |
$275 |
|
Credit Card Payment |
$250 |
|
Car Loan Payment |
$289 |
|
Entertainment |
$300 |
Questions:
- Based on their current life status, what are some of the goals Joanne and James should set to achieve when developing their insurance plan?
- What four questions should Joanne and James ask themselves as they develop the risk management plan?
- Once Joanne and James put their insurance plan in to action, what should they do to maintain their plan?
- What financial strategy would you suggest to Joanne and James to enable them to save money on their insurance premiums?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution
Trending nowThis is a popular solution!
Step by stepSolved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- 6. Chos Financial Planning Exercise B eBook Chapter 5 Financial Planning Exercise Home affordability analysis Use Worksheet 5.3. Rachel and Alexander Harrison need to calculate the amount they can afford to spend on their first home. They have a combined annual income of $67,500 and have $37,000 able for a d payment and closing costs. The Harmsons estimate that homeowner's insurance and property taxes will be $225 per month. They expect the mortgage lender to use a 30 percent of monthly gros cone) mortgage Worksheet payment affordability ratie, to lend at an interest rate of 6 percent on a 30 year mortgage, and to require a 10 percent down payment. Based on this information, use the home affordability analysis form i 5.3 to determine the highest priced home the Harrisons can afford. Assume that closing costs are one-half of the down payment. Round the answer to the nearest dollararrow_forwardInvestment strategy: Financial Mathematics You have just made your first $5,000 contribution to your individual retirement account. Assuming you earn an annual rate of return of 9.75 percent and make no additional contributions, what will your account be worth when you retire in 45 years? Show all working and forumlas used. Provide a breakdown of how all answers were derived.arrow_forward13. Moreon the time value of money The time value of money concept can be applied in various situations and is a fundamental concept underlying other financial concepts. Consider the following example of the application of this concept. Charles is a divorce attorney who practices law in New York City. He wants to join the American Divorce Lawyers Association (ADLA), a professional organization for divorce attorneys. The membership dues for the ADLA are $550 per year and must be paid at the beginning of each year. For instance, membership dues for the first year are paid today, and dues for the second year are payable one year from today. However, the ADLA also has an option for members to buy a lifetime membership today for $5,000 and never have to pay annual membership dues. Obviously, the lifetime membership isn’t a good deal if you only remain a member for a couple of years, but if you remain a member for 40 years, it’s a great deal. Suppose that the appropriate annual…arrow_forward
- Personal Finance Thirteenth Editionarrow_forwardplease answer only last reuriement You are a young personal financial adviser. Molly, one of your clients approached you for consultation about her plan to save aside $450,000 for her child’s higher education in United States 15 years from now. Molly has a saving of $120,000 and is considering different alternative options: Investment 1: Investing that $120,000 in a saving account for 15 years. There are two banks for her choice. Bank A pays a rate of return of 8.5% annually, compounding semi-annually. Bank B pays a rate of return of 8.45 annually, compounding quarterly. Investment 2: Putting exactly an equal amount of money into ANZ Investment Fund at the end of each month for 15 years to get 330 000 she still shorts of now. The fund is offering a rate of return 7% per year, compounding monthly. Required: a) Identify which Bank should Molly choose in Investment 1 by computing the effective annual interest rate (EAR)? b) Calculate the amount of money Molly would accumulate…arrow_forwardBusiness /Finance / Q&A Library / elena's son enter college 16 year from now. At the time she would like to have $20,0 elena's son enter college 16 year from now. At the time sh Question elena's son enter college 16 year from now. At the time she would like to have $20,000 available for college expenses. For that pur,her bank will set up an account that pay 7% compounded. If she makes payment into the account at the end of each quarter, what must Elena's payments to be achieve her goal Expert Answer Step 1arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Essentials Of InvestmentsFinanceISBN:9781260013924Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.Publisher:Mcgraw-hill Education,
Foundations Of FinanceFinanceISBN:9780134897264Author:KEOWN, Arthur J., Martin, John D., PETTY, J. WilliamPublisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...FinanceISBN:9781337395250Author:Eugene F. Brigham, Joel F. HoustonPublisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...FinanceISBN:9780077861759Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan ProfessorPublisher:McGraw-Hill Education
Essentials Of Investments
Finance
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:9780134897264
Author:KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:Pearson,
Fundamentals of Financial Management (MindTap Cou...
Finance
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i...
Finance
ISBN:9780077861759
Author:Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:McGraw-Hill Education