FV = $20,000 (FV 6, 6% )(FV 4, 5% ) = $34,484.38
14. Your parents have promised to give you a graduation present of $5,000 when you
graduate in four years. If interest rates stay at 6% compounded annually for the next four
years, how much is this money worth in today’s dollars?
PV = $5,000 (0.792) = $3,960
FINANCIAL PLANNING ACTIVITIES
1. Using Web sites such as www.canadianfinance.com, www.advocis.ca, www.quickent.ca, and search
engines, obtain information about commonly suggested actions related to various personal financial
planning decisions. What are some of the best sources of information on the Internet to assist you
with financial planning?
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Copyright © 2018 McGraw-Hill Education Ltd. All Rights Reserved.
Instructor’s Manual for Kapoor et al. Personal Finance 7CE.
An extensive amount of personal finance information is available on the Internet. Students should
also be referred to the end of each chapter for some of the most useful Web sites.
2. Survey friends, relatives, and others to determine the process they use when making financial
decisions. How do these people measure risk when making financial decisions?
This activity can be beneficial to both students and to whom they talk. Be sure students do not ask
questions that are too personal. It can be helpful to have students ask questions such as “What do you
believe are the main financial problems faced by individuals and families?” or “How should risk be
considered when selecting an investment?” With this format, the people being interviewed do not feel
pressured into talking about their personal situations.
3. Prepare a list of financial planning specialists (investment advisors, credit counsellors, insurance
agents, real estate brokers, tax preparers) in your community who can assist people with personal
financial planning. Prepare a list of questions that might be asked of these financial planning
professionals by (a) a young person just starting out on his or her own, (b) a young couple planning
for their children’s education and for their own retirement, and (c) a person nearing retirement.
Refer students to page 7 in the text as well as Appendix 1B. These references provide an extensive
basis for obtaining information regarding many aspects of financial planning. Point out to students the
importance of being able to find that answer to a question rather than trying to learn everything since
various factors (laws, economic conditions, and personal situations) change quite frequently.
4. Create one short-term goal and one long-term goal for people in these life situations: (a) a young
single person, (b) a single parent with an eight-year-old child, (c) a married person with no children,
and (d) a retired person.
Be sure students consider life situation, opportunity costs, and other factors. Differences among the
groups mentioned will relate to their values, financial needs, and goals. These factors will influence
how money is spent, saved, borrowed, and invested as well as the trade-offs that are present with
every financial decision. Financial needs are different for people with children than people without
children, and the risk associated with a decision investment is different for a young person with few
financial responsibilities than a retired person with no other income source.
5. Ask friends, relatives, and others how their spending, saving, and borrowing activities changed when
they decided to continue their education, change careers, or have children.
This activity will provide students with an opportunity to better understand the impact of changing
life situations on personal financial planning.
6. Use library resources or Web sites to determine recent trends in interest rates, inflation, and other
economic indicators. Information about the Consumer Price Index (measuring changes in the cost of
living) may be obtained at www.statcan.com. Report how this economic information might affect
your financial planning decisions.
This activity can help students appreciate the influence of the overall economy on personal financial
decisions. Exhibit 1-6 provides specific examples for this activity. Students may also ask people
questions such as “How do higher consumer prices and interest rates affect the financial situation and
decisions of people in our society?”
7. What actions would be necessary to compare a financial planner that advertises “One Low Fee Is
Charged to Develop Your Personal Financial Plan” and one that advertises “You Are Not Charged A
Fee, My Services Are Covered By The Investment Company for Which I Work”?
Students should consider the reputation of the organizations for which the financial planners work. In