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Finance 431 Homework Chapter 21;Do all calculations using 9 decimal places, retain the 9 decimal places throughout the;calculations, then when you report answers round to 2 decimal places. Examples: If the answer;is in years, i.e. 9.55769321 report 9.56. If the answer is in dollars. i.e. $56,987.55555 report to;the nearest cent 56,987.56. If the answer is in percent terms, i.e..104478324, then report;10.45. You need to be very precise with rounding and reporting.;1. Jamal and Jana Johnson own a home worth $315,000 with an outstanding mortgage;balance of $278,000. Jamals car has a blue book value of $19,500 and he has an auto;loan balance of $17,000. Janas car has a blue book value of $10,200 and she recently;paid off her auto loan. The couple has a savings account for emergencies with a;balance of $5,600. They owe a balance on their credit card of $4,200. They have;established a 529 college savings account for their son James with a balance of $1,000.;Jamal has an unpaid student loan balance of $16,000 Jana owes $1,600 on her student;loans. Jamal has a 401-k balance 0f $20,350, Jana has a Roth IRA account with a;balance of $16,480. Calculate the Johnsons net worth;$___________________________ (10 points);2. The Johnsons just became the proud parents of a baby girl, Jeanine. They would like to;start a 529 college savings plan for her immediately, making monthly payments for 18;years. They would like to have a balance of $60,000 available for college expenses.;a.;Assuming they can earn an annual rate of 7.5%, calculate the monthly payment they;must make;$_________________________ (10 points);b. Assume the Johnsons wait 10 years to begin making contributions to this 529;account and still would like to have a balance of $60,000 eight years later. If they;can earn an annual rate of 7.5% calculate the monthly payment they must make;$_____________________ (10 points);3. Jana has just gotten a new job with a salary of $85,000. Her new employer offers a 401k plan with a 6% match. Jana decides she will contribute 8% of her salary. Assuming;Jana and her employer continue the same annual contributions for 30 years and the;account earns 8.5% per year;a. What is Janas annual contribution?;$______________________ (10 points);b. What is her employers contribution?;$_________________________ (10 points);c. How much will Jana save in taxes every year if the Johnsons are in the 28% bracket;for federal and the 6% bracket for state?;$________________________ (10 points);d. How much will she have in her 401-k in 40 years?;$_________________________ (10 points);e. Assume Jana plans to purchase a 25 year annuity with monthly payments with her;401-k balance. If this annuity pays an annual rate of 7%, calculate her monthly;retirement income;$______________________ (10 points);4. Jamal also just got a new job and is trying to decide whether to cash in his 401-k;balance to pay off his car loan or roll the balance over into an IRA. He is 32 years old;and in the 28% bracket for federal and the 6% bracket for state.;a. How much will he get if he cashes in his IRA?;$______________________ (10 points);b. Assume he rolls his 401-k balance into an IRA which earns 8.1% a year. How much;will he have in this IRA in 30 years?;$_______________________ (10 points)

Paper#17902 | Written in 18-Jul-2015

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