• Jason's car was just stolen, and the police informed him that they will probably be unable to recover it. His insurance will not cover the theft. Jason has a net worth of $4000 all of which is easily convertible to cash. Jason requires a car for his job and his daily life. Based on Jason's cash flow, he can't currently afford more than

$300 in car payments. What options does he have? How will these options affect his net worth and cash flow?

What options does he have and how will these options affect his net worth and cash flow? (Select the best answer below.)

A.

He can convert his net worth to cash and avoid any effect on his cash flow He can convert his net worth to cash and avoid any effect on his cash flow.

B.

He can convert his net worth to cash, lowering his net worth and cash flow.

C.

He can borrow the needed amount, which will reduce his cash flow but leave his net worth unchanged.

D.

He can borrow the needed amount, which will reduce his net worth but leave his cash flow unchanged. Jason's car was just​ stolen, and the police informed him that they will probably be unable to recover it. His insurance will not cover the theft. Jason has a net worth of
​$4000 all of which is easily convertible to cash. Jason requires a car for his job and his daily life. Based on​ Jason's cash​ flow, he​ can't currently afford more than
​$300
in car payments. What options does he​ have? How will these options affect his net worth and cash​ flow?
What options does he have and how will these options affect his net worth and cash​ flow?  ​(Select the best answer​ below.)
A.
He can convert his net worth to cash and avoid any effect on his cash flow He can convert his net worth to cash and avoid any effect on his cash flow.
B.
He can convert his net worth to​ cash, lowering his net worth and cash flow.
C.
He can borrow the needed​ amount, which will reduce his cash flow but leave his net worth unchanged.
D.
He can borrow the needed​ amount, which will reduce his net worth but leave his cash flow unchanged.

Estimating the Opportunity Cost.  Julia brings home
​$2,550 per month after taxes.​ Julia's rent is $557 per​ month, her utilities are $170
per​ month, and her car payment is $412 per month. Julia is currently paying $294
per month to her orthodontist for her braces.​ Julia's groceries cost $78
per week and she estimates her other expenses to be $262 per month. As a​ result, she has $543
left each month to put toward savings to reach her financial goals. Julia is considering trading in her car for a new one. Her new car payment will be $519 per​ month, and her insurance cost will increase by
​$79 per month. Julia determines that her other​ car-related expenses​ (gas, oil) will stay about the same. What is the opportunity cost if Julia purchases the new​ car?
The opportunity cost if Julia purchases the new car is
​$ _________________
​(Round to the nearest​ dollar.)



Estimating Net Worth. Anna has just received a gift of $450 for her​ graduation, which increased her net worth by
​$450. If she uses the money to purchase a tablet​computer, how will her net worth be​ affected? If she invests the $450 at 55 percent interest per​ year, what will it be worth in one​ year?

If she uses the money to purchase a tablet​ computer, how will her net worth be​ affected?  ​(Select the

A. Anna's net worth will decrease when she spends the money to purchase the tablet computer.

B. Buying a tablet computer would not change​ Anna's net worth as she would be exchanging one asset for another.

If she invests the $450 at 55 percent interest per​ year, in one year it will be worth
​$___________
​(Round to the nearest​ cent.)


Estimating Net Worth.  At the beginning of the​ year, Arianne had a net worth of $6,000. During the year she set aside$ 100 per month from her paycheck for savings and borrowed $450 from her cousin that she must pay back in January of next year. What was her net worth at the end of the​ year?
At the end of the​ year, Arianne's net worth is
​$________________
​(Round to the nearest​ dollar.)







Financial Plan Components.  The six key components of a financial plan​ include:  ​(Select the best answer​ below.)

A. event planning event planning and resolving family differences resolving family differences.
B. financing large purchases financing large purchases and  tax planning tax planning.
C. event planning event planning and tax planning tax planning.
D. financing large purchases financing large purchases and planning your interior planning your interior.


Peer Pressure and Your Finances.  How can peer pressure impact your spending​ habits?
Peer pressure can cause you​ to:  ​(Select the best answer​ below.)
A. make impulse purchases and spend beyond your means. This in turn impacts your ability to save and invest for future needs.  
B. make impulse purchases and spend beyond your means. This in turn impacts your ability to create a budget because you never know how much money you will need to spend when you go out with your friends.
C. make necessary purchases and spend within your means. This in turn impacts your ability to save and invest for future needs.  
D. make necessary purchases and spend beyond your means. This in turn impacts your ability to save and invest for future impulse purchases.  



Net Worth.  Your net worth​ is:  ​(Select the best answer​ below.)
A. your assets plus your liabilities.
B. what you own minus what you owe what you own minus what you owe.
C. what you own plus what you owe.
D. what you owe minus what you own.

Net worth is important because​ it:  ​(Select the best answer​ below.)
A. is a measure of​ wealth, and can be used to evaluate changes​ in, and develop strategies to​ increase, wealth.
B.is reported in loan applications.
C .has to be monitored.
D.is reported to the Internal Revenue Service.