CFP Exam Prep - Fundamentals of Financial Planning (15%) EXAM QUESTIONS AND ANSWERS 100% SOLVED (Newest 2025) Suppose you have structured a budget with monthly periods as your budget intervals. Since certain expenditures such as auto insurance or a Thanksgiving charity donation do not occur every budget interval, they may be best incorporated
by:
- Estimating them into every budget interval.
- Estimating them in the budget only when incurred.
- Counting on increases in income.
D. Using tax refund. - Correct Answers ✅Solution: The
correct answer is A.These types of varied or periodic expenses should be accounted each recording period. An annual expense may be too large to account for at the time it is paid, better to save a little towards that goal as you go.As a rule of thumb, it is best if consumer debt does not
exceed:
- 20% of net income.
- 20% of gross income.
- 3 to 6 months of expenses.
- 36% of gross monthly income. - Correct Answers
✅Solution: The correct answer is A.
As a rule of thumb, consumers should not be spending more than 20% of their take home pay (net income) on consumer 1 / 4
CFP Exam Prep - Fundamentals of Financial Planning (15%) EXAM QUESTIONS AND ANSWERS 100% SOLVED (Newest 2025) debt (credit cards). This rule of thumb should factor along with the other recommendations for housing debt to be limited to 28% of gross income, and total debt not to exceed 36% of gross income.Charles Cornwall needs an income stream equivalent to $30,000 in today's dollars at the beginning of each year for the next 12 years to maintain his standard of living. He assumes inflation will average 5% over the long run and that he can earn a 7% compound annual after tax return on investments. What lump sum does Charles need to invest today to fund his needs?
A. $319,123.10
B. $325,202.39
C. $317,260.24
D. $323,605.44 - Correct Answers ✅Solution: The correct
answer is B.Begin Mode
N = 12
i = [(1.07/1.05) - 1] × 100 = 1.9048
PV = ?
PMT = 30,000
FV = 0 2 / 4
CFP Exam Prep - Fundamentals of Financial Planning (15%) EXAM QUESTIONS AND ANSWERS 100% SOLVED (Newest 2025) If you thought $319,123.10 was correct, your calculator is likely in END mode when it should be in BEGIN mode. Charles needs an income stream at the beginning of the year.David has won the Illinois state lottery. He must decide whether to receive annual payments of $250,000 at the beginning of each year for the next 20 years, or a lump sum payout. What lump sum amount does David need to receive to equal the $250,000 payments for the next 20 years, if he can earn an 8% return on his investments, assuming inflation is 3%?
A. $2,454,537
B. $2,650,900
C. $2,875,900
D. $3,307,511 - Correct Answers ✅Solution: The correct
answer is B.This is a present value of an annuity due problem. So, N = 20, I = 8, PV = ?, PMT = 250,000, FV = 0. Put your calculator in BEGIN mode and solve for PV. Inflation is not necessary in this calculation, lotto winnings income streams will not increase for inflation, they are the equivalent to a fixed annuity.Jamal Knight purchased a plot of raw land for $25,000 this week. His real estate agent is confident the land will appreciate at an average annual compound rate of 14.72% per year. Jamal wants to sell the land for $75,000. 3 / 4
CFP Exam Prep - Fundamentals of Financial Planning (15%) EXAM QUESTIONS AND ANSWERS 100% SOLVED (Newest 2025) Approximately how many years must he own the property to receive $75,000 when he sells it?
- Six years.
- Seven years.
- Eight years.
D. Nine years. - Correct Answers ✅Solution: The correct
answer is C.N = ?i = 14.72
PV = (25,000)
PMT = 0
FV = 75,000
Solve for N: 8
Your client wants to receive payments of $2,500 from her investments at the beginning of each month during her retirement to supplement her pension plan benefits. Your client estimates she will need to receive this monthly payment for 35 years. If an 8.5% annual return is earned on investments, compounded monthly, what amount does your client need to have at the time of her retirement to fund her needs?
A. $334,734
B. $337,106
- $6,488,916
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