1.What are some of the main components of personal financial planning? 2.What fa

Question

1.What are some of the main components of personal financial planning?

2.What factors influence the level of interest rates?

3.Use time value of money tables to calculate the following:

a. The future value of $100 at 5percent in 8years

b. The future value of $100 a year for 8 years earning 8percent

c. The present value of $1500 received in 10years with an interest rate of 4percent.

4.In early 2015, selected automobiles had an average cost of $20,000. The average cost of those same motor vehicles is now $24,000. What was the rate of increase for this item between the two time periods?

5.How are Budgets defined according to Todd’s lecture?

6.Define the four classes of assets.

Explanation / Answer

As per rules I will answer the first 4 sub parts of the question

1: The main components of a financial plan are

Objectives, Income of individual, expenses, debt burden, taxes, age of retirement, income required at retirement and the cost of capital.

2: Some factors which influence the interest rates are

The general economic growth and inflation affect the interest rates but are beyond the control of the business. Besides this, the capital structure of the company, tax rates, dividend policy and investment policy also affects the interest rates.

3: a: FV = PV*(1+r)^n

= 100*1.05^8 = $147.75

4: 3b FV= 100*1.08^8= $185.09

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