Math

Gary Grandview —A Continuing Case

This is a continuing 6 part practical application of the material learned in class.

Each part of the Continuing Case study has a reading assignment document and a homework document.

Utilize the all information provided to you. Read the Case and answer the questions in the coordinating Gary Grandview Excel file.

As you progress through the sequential parts, the financial information will be updated.

Analyze the material and give Gary advice from the perspective as his financial analyst. Give Gary advice on items he may or might not have previously considered.

Answers are to be provided using proper grammar and in business language tone.

Gary Grandview — Part 1

Gary is a 25 year old single male who graduated from college a few years ago. Gary has been working as a computer specialist for an ‘up and coming’ company for the past 3 years. Gary has an active lifestyle. He enjoys going out with friends during the week and getting out of the city at least once per month to relax and go camping. Gary’s favorite camping spot is on the shores of Lake Oswego approximately 40 miles from where he lives.

Gary received a raise last year and now earns a gross income of $48,000 per year. Gary’s tax return revealed that he paid $3,672.00 in FDIC payroll taxes [$696.00 in Medicare and $2976.00 in Social Security] and contributed $4,680.00 toward his medical benefits. Gary has college loan payments of $320.00 per month on $32,000 student loans (Current balance 16,880.00). Gary’s receives his paychecks by automatic deposit and does not always pay attention to the balance in his checking account.

Gary is renting a 2 bedroom apartment in a building that the owner is considering converting into Condominium Complex. Two years ago Gary purchased a new red 4 wheel drive pick-up for $24,300 ($ 18,500 Blue Book value) and his payments are $358.00 per month. The pickup has a current loan balance of $18,200.00, and pays $325.00 per month in auto insurance coverage.

Where Gary currently resides, there is no public transportation available, therefore he commutes to work each day. Traffic is heavy getting into the city therefore the drive to work often takes Gary 35 - 45 minutes. Gary likes his pickup and is impressed that it gets 17 miles to the gallon.

Gary has some decisions to make and comes to you (his new best friend and financial analyst) for some advice. His spending is a little out of control and asks your help in creating a budget he can live with. You discover that Gary has a few other monthly expenses that Gary forgot to mention and need to be included in his monthly budget:

Renter’s insurance 50.00

Utilities (gas and electric) 110.00

TV, Internet, & House phone 120.00

Cell phone (personal calls) 225.00

Food (consumed at home) 200.00

Clothes 170.00

Car expenses (gas, maintenance) 254.00

Camping 325.00

Entertainment (dining out, golf, weekend trips) 400.00

Gary is surprised at how much money he is spending on living costs. He admits that when he is short on cash he uses his credit card and has accumulated a balance of $8,600.00. Gary also admits that sometimes he has a hard making the $200.00 credit card payments on time.

Gary currently has $2,110.00 in his checking account and $490.00 in his savings account. His bank requires automatic deposits to maintain a free checking account. He has household furnishings valued at $2,700.00, $2,500.00 in speculative Green Planet Technology Stock and a small ten year $500.00 municipal bond he received from his mother upon graduation.

Gary has a few concerns he would like you to consider regarding his payments. Gary’s credit card payment, student loan and rent are all due on the first of the month. Gary wants to retire when he is 50. Gary knows he should start investing in a retirement plan; however he feels he cannot afford it even though his employer offers a matching fund up to $3,600 per year. Gary thinks he should be able to afford to start investing in the retirement fund in 5 years. Gary is confident he will be able to retire as planned if he invests $300 per month.