Question

Congratulations! You just finished up your MHA. You are now
making the big bucks!! You are pulling down $75,000 a year. Your
estimated payroll taxes are 20%. You also have a small healthcare
consultancy and you make $100 a month for your wonderful advice.

You have a lot of expenses: You bought a new car - the car note is
$350 a month. Gas for your car is $50 a month You have a mortgage
of $850. Health insurance is $400 You love to eat out and you spent
$300 a month in food. You have a student loan payment of $300 You
have a credit card monthly statement of $1,100

How much do you have left at the end of this month?

Answer: $1,750

Answer: $2,000

Answer: $1,500

Answer: $5,100

2. You just started this MHA. You are looking forward to the day
that you are done and gainfully employed. You really liked this new
Honda Accord that just came out (because one of your professors
used to work for Honda). Today the cost of that car is $32,000. You
are smart and you know you need to put money away today – so that
in FIVE years, you can purchase it. You are going to put your money
away in index fund that will earn 7% interest. Annual inflation is
expected to be 3.2%. How much money do you need to invest today to
be able to afford that car?

Answer: $65,000.00

Answer: $32,000.00

Answer: $26,707.27

Answer: $10,000.50

3. You listened to Justin’s lecture and you decided that you want
to put $50,000 you have in savings today into a retirement account.
The account will have an average annual return of 8%. You are
currently 30 years old. You will need these funds when you retire
at age 65 (35 years from now). How much money will that be?

Answer: $739,267.21

Answer: $800,000.51

Answer: $50,000.00

Answer: Who cares – I am buying a boat! (Hint – this is a wrong
answer)

4. How much do I need to retire? Here are your assumptions. You are
30. You will retire when you are 65. You want $40,000 a year when
you retire. You will be an aggressive investor today and have an
average market return of 9%. When you retire, you will be
conservative in your investing and get into bonds that have a
market return of 4.5%. You expect that inflation will be 3%. You
currently have $20,000 in savings as of today. You are expecting to
live until 85. How much do you need to have saved when you turn 65?
(Hint: if you want to work out how much you need to save every
year, under PMT, it will be 36 years)

Answer: $1,000,000.00

Answer: $3,200,846.75

Answer: $45,000,000

Answer: $1,940,755.74

5. You are buying a car. You do not like playing the financing game
where they leave you in the sales room for an hour to go calculate
everything – because you are busy, you got stuff to do. The car
costs $15,000. The interest on the car is 2.5% annual. You want to
pay it off in 5 years. Tell the salesperson what the car payment
will be per month.

Answer: $180.45

Answer: $266.21

Answer: $789.38

Answer: $50.00

6. You just graduated with your LSUS MHA. Healthcare professionals
are eager to hire you. You have two competing job offers. Job #1 –
offers $50,000 a year with a guarantee raise of 2% a year. Job #2
offers $48,000 with a guarantee of 6% raise every year. You know
that you will stay at this job for 5 years minimum. You expect
inflation (discount rate) to be around 3%. What job do you
take?

Answer: Job #1 – The NPV is $250,450

Answer: Job #1 – The NPV is $238,051

Answer: Job #2 – The NPV is $246,984

Answer: Job #2 – The NPV is $415,002

7. Was my degree worth it? I went to LSUS for 2 years and did not
work. It cost me $35,000 per year (tuition and living). When I
graduated I will make $80,000 per year.

If I did not get my MHA, I would make $40,000 a year. I would not
have been out-of-pocket any money.

Regardless, of my decision, I expect to earn 2% increase in salary
every year. Inflation will be around 3%. I am currently 30 and I
want to retire at age 65.

Was going to school worth it?

Answer:

Yes – the present value of my degree is $851,673 Answer:

No – I missed a lot of good TV shows Answer:

No – I had to spend $35,000 grand for three years.

8. If I purchase a home for $150,000. I do a fixed 30-year mortgage
at 6%. My total fees and percent down on the home equaled $12,500.
What would be my annual payment?

Answer: $6,456.72

Answer: $9,376.24

Answer: $10,897.34

Answer: $12,345.67

Answer #1

4. How much do I need to retire? Here are your assumptions. You
are 30. You will retire when you are 65. You want $40,000 a year
when you retire. You will be an aggressive investor today and have
an average market return of 9%. When you retire, you will be
conservative in your investing and get into bonds that have a
market return of 4.5%. You expect that inflation will be 3%. You
currently have $20,000 in savings as...

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I don't really need the answer since I have the answer. I just
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