Buying real estate to rent is an option that has higher risk than some other investments. However, the returns can be good. Assume you have purchased a single-family home that you intend to rent. The house will rent for $\$750$ per month. You will have the following expenses:

• Monthly mortgage $\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,$ $\$390$
• Monthly insurance $\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,$ $\$60$
• Taxes every 6 months $\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,$ $\$340$
• Repairs (yearly estimate) $\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,\,$ $\$500$
• Monthly lawn care or snow removal $\,\,\,\,\,\,\,\,\,$ $\$100$

Calculate the total yearly expenses you will have for the rental property.

Use the key terms to complete the following sentence:

Buying stock in a mutual fund or REIT is a type of __________________.

Answer the question to help you recall what you have read. If you cannot answer a question, read the related section again.

Explain why having liquid savings is important.

You have a CD for $\$1,000$. The interest rate is 5 percent annually, and the term is 5 years. The CD has an early withdrawal penalty. If the money is withdrawn before 36 months, no interest is paid, and a penalty of 6 months’ interest is levied. If you withdraw the money after 12 months, what penalty will you pay? How much money will you get?

Work with a classmate to complete this activity.

Open the Word file CH11 Grid from the data files. This file contains the grid shown on the following page.

Investors who buy mutual funds have many funds to choose from. Some funds have the potential for high returns but also have high risk. Other funds have lower risk but also provide lower returns. In this activity, you will create a chart to compare returns for funds that have low, medium, and high risk. The three funds are described below.

Balanced Fund

This fund seeks current income, long-term growth of capital and income, and preservation of capital. This is a low-risk fund.

Index Fund

This fund seeks above-average returns by investing at least 80 percent of its assets in equity securities, which are primarily stocks. The fund’s risk profile is similar to that of the Standard & Poor’s 500 Index. This is a medium-risk fund.

Growth Fund

This fund seeks long-term gains by normally investing at least 80 percent of its assets in stocks of companies with above-average earnings growth. This is a high-risk fund. Returns for each fund for a period of 8 years are shown in the following table:

Open the Excel file CH11 Funds Data from the data files. This file contains the returns data for the three mutual funds as shown in the table.

Many people start investing with short-term and low-risk choices. They want the investments to be liquid so that they can get their money quickly if needed. In the case below, consider the risk and liquidity of savings and investing options. Give advice to each of the investors.

Antonio is working full-time. He started his first job 6 months ago. He pays his bills and has $\$300$ a month remaining. Rather than spend this money, Antonio has decided to set it aside for the future. He has signed an annuity contract whereby he will pay $\$300$ a month for the next 20 years. Then he will start receiving payments from the annuity, or he can leave the money there to gain more earnings until he retires. He has no savings account or other investments at this point. Has Antonio made a good investment choice? Are there other options that might be better for him to consider for his portfolio at this time?

Answer the question to help you recall what you have read. If you cannot answer a question, read the related section again.

List three types of retirement accounts that can be opened by an individual.

Write the equation in point-slope form of the line that passes through the given point with the given slope. (3.5, 7.5); m = 1.5

Use Table discussed earlier to find the annual premium of each of the following life insurance policies:

$$\begin{array}{} \begin{array}{}\text{Sex} \end{array}& \begin{array}{}\text{Age} \end{array}& \begin{array}{}\text{Policy type}\end{array}& \begin{array}{}\text{Rate classification} \end{array}& \begin{array}{}\text{Face Value}\end{array}& \begin{array}{}\text{Annual premium}\end{array}&\\ \text{Female}&30&\text{Whole-life}&\text{NT}&\$200,000 \end{array}$$

The following revenue and expense account balances were taken from the ledger of Veggie Health Services Co. after the accounts had been adjusted on February 28, 2014, the end of the current fiscal year:

$$\begin{array}{lrlr} \text { Depreciation Expense } & \$ 9,000 & \text { Service Revenue } & \$ 270,900 \\ \text { Insurance Expense } & 4,000 & \text { Supplies Expense } & 3,000 \\ \text { Miscellaneous Expense } & 6,000 & \text { Utilities Expense } & 17,600 \\ \text { Rent Expense } & 42,000 & \text { Wages Expense } & 213,100 \end{array}$$

Prepare an income statement.

Direct labor hours are estimated as 2,000 in Quarter 1; 2,100 in Quarter 2; 1,900 in Quarter 3; and 2,300 in Quarter 4. Prepare a manufacturing overhead budget using the information provided.

$$\begin{array}{lrlr} \text { Indirect material per hour } & \$ 1.00 & \text { Supervisory salaries } & \$ 17,000 \\ \text { Indirect labor per hour } & 1.25 & \text { Maintenance } & 5,000 \\ \text { Maintenance per hour } & 0.25 & \text { Property taxes and insurance } & 6,000 \\ \text { Utilities per hour } & 0.50 & \text { Depreciation } & 3,500 \end{array}$$

The following revenue and expense account balances were taken from the ledger of Wholistic Health Services Co. after the accounts had been adjusted on February 28, 2019, the end of the fiscal year:

$$\begin{array}{lrlr}\text { Depreciation Expense } & \$ 7,500 & \text { Service Revenue } & \$ 448,400 \\ \text { Insurance Expense } & 3,000 & \text { Supplies Expense } & 2,750 \\ \text { Miscellaneous Expense } & 8,150 & \text { Utilities Expense } & 33,900 \\ \text { Rent Expense } & 54,000 & \text { Wages Expense } & 360,000\end{array}$$

Prepare an income statement.

Solve the problemx.

Three years ago Martha Spencer, owner of The Doll (a) House, lost control of her car while trying to find her cell phone and forced another driver (b) off the road. The court awarded $\$28,000$ to the driver of the other car and $\$8000$ to a passenger of the other car. Spencer had limits of $15 / 30$. (a) Find the amount the insurance company paid. (b) Find the amount Spencer had to pay.

$$\text{(a)}\qquad\underline{\qquad\qquad\qquad\qquad}$$

$$\text{(b)}\qquad\underline{\qquad\qquad\qquad\qquad}$$