Wendy, a CFP® professional, is meeting with her client, Chrissy, to discuss her goals. Chrissy advises Wendy that one of her goals is to take an expensive hiking trip in the Alps, something her mother and grandfather had done when they were young. She'd like to keep this tradition in her family. Wendy believes that, because of Chrissy's financial circumstances, this is not the best use of Chrissy's money. What should Wendy do to best serve her client, Chrissy?
I. Wendy should understand that expensive trips like hiking in the Alps is an important family tradition to Chrissy.
II. Wendy should consider the trip as one of Chrissy's goals and explain how such a goal would impact her overall financial plan.
III. Wendy should share her opinion with Chrissy and persuade her to abandon this as one of her goals.
IV. Because Wendy, as Chrissy's financial planner, does not feel taking the trip is a wise financial decision, she should not include it in Chrissy's financial plan as a goal.
Blake and Sarah have a monthly mortgage payments of $850 (principal, interest, taxes, and insurance [PITI]) on a mortgage balance of $95,000 on their home. They have an auto loan balance of $5,000, with monthly payments of $250. Additionally, they have a credit card balance of $2,000, on which they pay $225 each month. Blake and Sarah's net income for the past year was $35,000. Their gross income was $48,000.
Are Blake and Sarah using excessive amounts of debt?
Wes is considering investing in a new printing press for his printing business. The purchase price of the printing press is $225,000 and he expects to be able to sell it for $150,000 at the end of five years. During the five-year period, he expects the equipment to increase her annual cash flows by $45,000 (year 1), $32,000 (year 2), $24,000 (year 3), $16,000 (year 4), and $10,000 (year 5). If his opportunity cost is 7%, what is the net present value (NPV) of this investment?