Sandra asks…


Sven Smorgasbord is 35 years old is presently experiencing the “good” life. As a result, he anticipates that he will increase his weight at a rate of 3 percent a year. At present he weighs 200 pounds. What will he weigh at age 60?

Craig Roggow answers:

The answer is 418.76 pounds.

Ok. This is a ‘fairly’ simple growth question. The formula I’m using is for compound growth which I’m sure you’ve heard of, as you put this question in the right section. (Compound growth is used most in finance). This is how the formula looks:

FV = PV ( 1+i )^n

Where FV is future value (his future weight which is what you want). ‘i’ is the growth rate. 3% growth means i will be 0.03. And n is the number of years he’ll grow over, which is 60-35 = 25 years old. For this question the formula could be worded as:

Weight, multiplied by ((1+percentage growth) to the power of number of years he’ll be growing).

= 200*(1.03^25)

The answer is 418.76 pounds.

To help you understand. If you’re growing by 3 percent a year. Then next year you will be 1.03 multiplied by the weight you are now. This would be 200 * 1.03

His weight in two years would be 200 * 1.03 (the weight after the first year) which will then grow by 1.03, so the above bit needs to be multiplied by another 1.03. So in two years he’ll be 200*1.03*1.03 or 200*1.03^2. You’ll notice the power is simply the number of years he’s been growing. After three years would be 200*1.03^3.

So it ends up being 200* (1.03 to the power of 25)

Good luck with any other questions.

Susan asks…


The “Rule of 72” suggests that an amount will double in 12 years at a 6 percent compound annual rate or double in 6 years at a 12 percent annual rate. Is this a useful rule, and is it an accurate one?

Craig Roggow answers:

Have you always wanted to be able to do compound interest problems in your head? Probably not, but it’s a very useful skill to have because it gives you a lightning fast benchmark to determine how good (or not so good) a potential investment is likely to be.

The rule says that to find the number of years required to double your money at a given interest rate, you just divide the interest rate into 72. For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years.

Yes, it is a useful tool and is reasonably accurate.

Steven asks…

What are some useful finance classes to take if I am planning to do a minor in Finance?

I’m an accounting major planning to do a minor in Finance and need to know what are the useful classes in Finance I should take? Here are the courses I can choose from; Financing New Ventures, Managing Corporate Assets and Liabilities, Intermediate Investments, Financial Analysis and Modeling, Finance in the Global Environment, Advanced Corporate Financial Planning, Introduction to Options and Futures, and Seminar in Finance. I have already taken two Finance classes towards my minor and need to take three more.

Craig Roggow answers:

Hopefully they are all useful. I expect there is some duplication among these classes and class you taken or will take.

Why are you getting a minor in Finance? Do want to reinforce what your learning in accounting or broaden your knowledge base?

Seminar in Finance — cover a broad area of topics. Might be useful in deciding what other classes you might want to take. You might find most seminar boring and strictly academic exercises or you might enjoy them all.

Financing New Ventures — useful but mostly if you want to work with New Ventures.

Managing Corporate Assets and Liabilities — general applicable and might reinforce your other management accounting class work

I take both
Financial Analysis and Modeling
Advanced Corporate Financial Planning.
I think they will reinforce your management accounting classes and have considerable usefulness in most future careers.

I assuming you had some introductions to investment, take these if you like the class and want more otherwise skip them. Although you should have a understanding of Options and Futures, I assume get the basic material in another class.

Intermediate Investments
Introduction to Options and Futures

Finance in the Global Environment — You could get this information in other classes, Take this class if I really wanted to understand in detail how the global economic and monetary policy works.

Linda asks…

Can a finance company have my tax return garnished or taken away?

10 years ago I defaulted on a car loan, and still owe the finance company $7000, which I’m planning on paying now. Can the finance company take my tax return, or only if I owe FEDERAL AGENCIES?
The case went to court, and I was in another state at the time, so judgment was awarded to the finance company.

Craig Roggow answers:

It is a problem in a matter of law.
You should turn to your laywer for professional advice.

John asks…

What banks can finance a single family residence under 600 square feet?

Hello. I am attempting to buy a foreclosure in San Diego that is a single family residence with a total square footage of 528. I was told it is difficult for banks to finance anything under 600 square feet. The house is in good shape but its tiny. I need financing asap since the bank already accepted my offer. Thanks.

Craig Roggow answers:

Are you working with a Realtor? Ask them to suggest someone.

If not, Find a Mortgage Broker/Banker who can shop the market for you and find an investor who will finance you.

If you cant find anyone, I hope you made the offer contingent on you finding financing, if not, you are out of your earnest money when you back out.

Good Luck!

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