| | Name: | | | | | Date: |
| | Name: |
| | Gary Grandview — A continuing Case — Part 1 |
| | Tools for Financial Planning |
| a. | This is a continuing case (Parts 1 - 6) Read the coordinating Word Document on Gary. Assume the role of Gary's financial advisor. Apply the facts and provide analytical answers. Note: Part 1 should be considered while analyzing Parts 2-6. |
| b. | Please make sure that WRAP TEXT and MERGE and CENTER are ON. (*Excel Toolbar, Home Tab, Alignment section) |
| c. | Ensure your answers can be seen in the yellow highlighted text box. Need more space? Increase height of the text box. a) Drag the bottom line of the number row (far left column) down, or b) Insert a row while inside the yellow text box. |
| d. | Ensure printed copies are readable. Print in Portrait. |
| e. | Save and upload the document in the In Box. Print a copy for class. |
| | Case Questions | | | | | | | Value of Points |
| | | | | | | | | Possible | Deducted |
| 1 | Gary Grandview's Personal Cash Flow Statement |
| | Monthly Cash Inflow | | | | | | | |
| | Disposable Income ( After Taxes ) | | | | | | | |
| | | | | | | | | |
| | Total Cash Inflows | | | | | $0.00 | | 2 |
| | Monthly Cash Outflow | | | | | |
| | Rent | | | | | |
| | Renter's Insurance | | | | | |
| | Utilities (gas and electric) | | | | | |
| | TV, Internet, & House phone | | | | | |
| | Cell Phone ( personal calls ) | | | | | |
| | Food (Consumed at home) | | | | | |
| | Clothes | | | | | |
| | Car expenses ( gas & maintenance ) | | | | | |
| | Vehicle Payment | | | | | |
| | Vehicle Insurance Payment | | | | | |
| | Entertainment | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | Total Cash Outflows | | | | | $0.00 | | 2 |
| | Net Cash Flows | | | | | $0.00 | | 2 |
| |
| |
| 2 | Gary's Personal Balance Sheet |
| | Assets |
| | Cash |
| | Checking account | | | | | |
| | Savings account | | | | | |
| | Other liquid assets |
| | Total liquid assets | | | | | $0.00 | | 2 |
| | Household Assets |
| | Home | | | | | |
| | Car | | | | | |
| | Furniture | | | | | |
| | Total household assets | | | | | $0.00 | | 2 |
| | Investment Assets |
| | Stocks | | | | | |
| | Bonds | | | | | |
| | Mutual Bonds | | | | | |
| | Other investments |
| | Total investment assets | | | | | $0.00 | | 2 |
| | Total Assets | | | | | $0.00 | | 2 |
| | Liabilities |
| | Current Liabilities |
| | Loans | | | | | |
| | Credit card balance | | | | | |
| | Other current liabilities |
| | Total current liabilities | | | | | $0.00 | | 2 |
| | Long-Term Liabilities | | | | | | | |
| | Mortgage | | | | | | | |
| | Car loan | | | | | | | |
| | College Loans | | | | | |
| | Total long-term liabilities | | | | | $0.00 | | | |
| | Total Liabilities | | | | | $0.00 | | 1 |
| | | | | | | | | |
| | Net Worth | | | | | $0.00 | | 2 |
| | | (Total Assets - Total Liabilities) |
| | |
| 3 | Analyze Gary's expenditures. Offer Gary specific recommendations on how to |
| | adjust his budget to achieve the following. |
| a) | A positive cash flow (minimum point is to break even). |
| | |
| | | | | | | | | | |
| | | | | | | | | 2 | |
| b) | Pay off his debt. |
| | |
| | | | | | | | | 2 | |
| c) | Save $3,600 per year for retirement. | | | | | |
| | |
| | | | | | | | | 2 | |
| d) | What are three advantages and three disadvantages of Gary having a credit card? |
| 1) | Advantage: |
| | Disadvantage: |
| | | | | | | | | 1 | |
| 2) | Advantage: |
| | Disadvantage: |
| | | | | | | | | 1 | |
| 3) | Advantage: |
| | Disadvantage: |
| | | | | | | | | 1 | |
| 4) | What additional goals do you think Gary should consider in the short term, |
| | intermediate and long term. What would change if Gary were to marry in 2 years? |
| | |
| | | | | | | | | | |
| | | | | | | | | 2 | |
| 5) | Assuming that Gary has an employer matching fund plan and invests the $7,200 ($300 per month plus the matching fund) per year for 20 years, and begins investing five years from now, how much will be in fund in 25 years if Gary is able to invest at 7% per year? |
| | Future Value of an Annuity |
| | Payment per Period | | | | | |
| | Number of Periods | | | | | |
| | Interest Rate per year | | | | | 7.00% |
| | Future Value | | | | | $0.00 | | 2 |
| |
| 6) | Compare the alternative of investing $7,200 every year for 25 years beginning today. |
| | (Again assume a 7 percent annual return.) |
| | Future Value of an Annuity |
| | Payment per Period | | | | | |
| | Number of Periods | | | | | |
| | Interest Rate per year | | | | | 7.00% |
| | Future Value | | | | | $0.00 | | 2 |
| | |
| 7) | Consider Gary's plan in the question 6. Is Gary's plan to retire in 25 years realistic? Will the plan provide an adequate income during Gary's retirement years estimating he will live for another 30 to 40 years? If not, provide Gary with a revised fund goal. Are there any other future factors Gary should consider when revising his retirement plan? |
| | Future Value of an Annuity |
| | Payment per Period | | | | | |
| | Number of Periods | | | | | |
| | Interest Rate per year | | | | | 7.00% |
| | Future Value | | | | | $0.00 | | 2 |
| | |
| | | | | | | | | |
| | | | | | | | | 2 | |
| 8) | Develop three suggestions that could help Gary reduce his income tax exposure. |
| | The entire matrix must be completed. |
| | Suggestions to Reduce Taxes | | | | Why is this an advantage? |
| a) | | | | | | | | 2 |
| b) | | | | | | | | 2 |
| c) | | | | | | | | 2 |
| | | | | | | | | | |
| 9) | Consider Gary's debt. Would any of your financial planning |
| | recommendations change if he were 45 and still single? |
| | If he were 60? Why or why not? | | | | | | | | |
| a) | |
| | | | | | | | | 2 | |
| b) | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | 2 | |
| 10) | After you informed Gary of his negative monthly net cash flow, Gary indicated |
| | that he may delay paying his credit card bills for a couple months to reduce his cash |
| | outflows. What are some consequences of non-payment of debts? |
| | |
| | | | | | | | | 2 |
| | | | | | | Total | | 50 | 0 |
| | | | | | | Final Score | | | |