a
To determine: The categories and amount in H’s budget where they realistically might cut back $2,400.
Introduction:
Budgeting:Financial success of an individual or business depends on right choice at the right time. Budget is a model of application of these choices. A budget is planned or estimated and actual income and expenditures over period of time. In simple words, a budget is a financial plan to achieve your objectives.
A budget is required to be reconciled depending on the environment and other factors.
b
To determine: The recommendations for handling fixed and variable expenses.
Introduction:
Budgeting:financial success of an individual or business depends on right choice at the right time. Budget is a model of application of these choices. A budget is planned or estimated and actual income and expenditures over period of time. In simple words a budget is a financial plan to achieve your objectives.
A budget some time required to be reconciled depending on the environment and other factors.
c
To determine: H’s income after five years with the revised data.
Introduction:
Budgeting:Budgeting:financial success of an individual or business depends on right choice at the right time. Budget is a model of application of these choices. A budget is planned or estimated and actual income and expenditures over period of time. In simple words a budget is a financial plan to achieve your objectives.
A budget some time required to be reconciled depending on the environment and other factors.
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Personal Finance (MindTap Course List)
- Carl is a student at a college. He has a part-time job with take-home pay of $525 every two weeks. He has received a scholarship of $4100 this year. a) Use the data provided to design a monthly budget for Carl. Show your calculations for his income and expenses. Identify each expense as fixed or variable. b) Is Carl earning enough to cover his expenses? If not, suggest how he could balance the budgetarrow_forwardas à financial planner. A couple has asked you to put together an investment plan for the education of their daughter. She is a bright seven-year-old (her birthday is today), and everyone hopes she will go to university after high school in 10 years, on her 17th birthday. You estimate that today the cost of a year of university is $16,500, including the cost of tuition, books, accommodation, food, and clothing. You forecast that the annual inflation rate will be 5.4%. You may assume that these costs are incurred at the start of each university year. A typical university program lasts 4 years. The effective annual interest rate is 6.65% and is nominal. a. Suppose the couple invests money on her birthday, starting today and ending one year before she starts university. How much must they invest each year to have money to send their daughter to university? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Investment per year $ b. If the couple waits 1 year,…arrow_forwardJamie Lee and Ross agree that by accomplishing their short goals, they can budget $5,000 a year towards their long-term investment goals. They are estimating that with the allocations recommended by their financial advisor, they will see an average of 7 percent on their investments. The triplets will begin college in 15 years and will need $100,000 for tuition. Using the Time Value of Money calculations, decide if Jamie Lee and Ross will be on track to reaching their long-term financial goals of having enough money from their investments to pay the triplets’ tuition.arrow_forward
- Trevor and Kristen Hill need to prepare a cash budget for the next three months to make sure that they can cover their expenditures during the period. Trevor and Kristen have tracked their finances for the past few years using an app, and thus know what percentage of their take-home pay of $5500 goes for various expenses. Expenses Housing Utilities Food Transportation Medical/dental Contributions Clothing (3% normally; $450 in Month 3) Property Taxes ($1260, Month 2 only) Appliances Personal Care Travel and Entertainment (6%; $1400 in Month 3) Other Savings 29.0% 5.0% 9.5% 6.0% 5.0% 10.5% 3.0% a. 1.0% 2.0% 6.0% 5.0% 7.5% The Hills must maintain a $1500 cash balance to avoid checking fees; however, the balance on March 31, 2021 was $1300. Their savings account balance on March 31 was $20,000. Prepare a quarterly cash budget for Trevor and Kristen for the next three months. b. Using your calculations, show the monthly inflows and outflows and the end-of-month balances for the Hills…arrow_forwardA father is now planning a savings program to put his daughter through college. She is 13, plans to enroll at the university in 5 years, and she should graduate 4 years later. Currently, the annual cost (for everything - food, clothing, tuition, books, transportation, and so forth) is $19,000, but these costs are expected to increase by 6% annually. The college requires total payment at the start of the year. She now has $8,500 in a college savings account that pays 8% annually. Her father will make six equal annual deposits into her account; the first deposit today and sixth on the day she starts college. How large must each of the six payments be? Do not round intermediate calculations. Round your answer to the nearest dollar. (Hint: Calculate the cost (inflated at 6%) for each year of college and find the total present value of those costs, discounted at 8%, as of the day she enters college. Then find the compounded value of her initial $8,500 on that same day. The difference…arrow_forwardOn January 1, you plan to take a trip around the world upon graduation four years from now. Yourgrandmother wants to deposit sufficient funds for this trip in an investment account for you. On thebasis of a budget, you estimate that the trip currently would cost $15,000. Being the generous andsweet lady she is, your grandmother decided to deposit $3,500 in the fund at the end of each of thenext four years, starting on December 31, 2015. The account will earn 6 percent annual interest,which will be added to the account at each year-end.Required (show computations and round to the nearest dollar):1. How much money will you have for the trip at the end of year 4 (i.e., after four deposits)?2. What is the total amount of interest earned over the four years?3. How much interest revenue did the fund earn in 2015, 2016, 2017, and 2018?arrow_forward
- A parent is now planning a savings program to put a daughter through college. She is 13 and plans to enroll in college in 5 years, and she should graduate 4 years later. Currently, the annual cost for college is $15,000 and is expected to increase 4% each year. The college requires that the costs be paid at the start (hint: beginning) of each year. The child now has $7,500 saved for college in an account and is expected to have a return of 6% annually. The parent will make five equal payments starting today and where the fifth and final payment will be one year before she starts college and will make no more additional payments. How much must each of the payments be to fully fund the college cost? Answer the following questions: 1. What is the expected cost of college in each of the 4 years? 2. How much will need to be in the account before the first payment to fully pay for college? 3. How much will the initial savings grow to before the first payment is…arrow_forwardA parent is now planning a savings program to put a daughter through college. She is 13 and plans to enroll in college in 5 years, and she should graduate 4 years later. Currently, the annual cost for college is $15,000 and is expected to increase 4% each year. The college requires that the costs be paid at the start (hint: beginning) of each year. The child now has $7,500 saved for college in an account and is expected to have a return of 6% annually. The parent will make six equal payments starting today and the sixth on the day she starts college and make no more additional payments. How much must each of the payments be to fully fund the college cost? Tip: Use PMT function at ‘END’ to solve and not ‘BEGINNING’. Think about what the ‘END’ parameter is doing to grow the cash flows. Treat ‘today’ as if the decision to make the investment in the college was 12 months ago and that ‘today’ is the first payment. Answer the following questions: 1. What is the…arrow_forwardThe Financial Statements of harry and Belinda Johnson Suggest Budgeting Problems Harry has worked at a medium-size interior design firm for five years and earns a salary of $4,080 per month. He also receives $3,000 in interest income once a year from a trust fund set up by his deceased father’s estate. Belinda earns a salary of $6,400 per month, and she has many job-related benefits including flexible benefits program, life insurance, health insurance, a 401(k) retirement program, workplace financial education, and a credit union. The Johnsons live in an old apartment located approximately halfway between their places of employment. However, their rent will increase by $100 a month in July. Harry drives about ten minutes to his job, and Belinda travels about 15 min- utes via public transportation to reach her downtown job. Harry and Belinda’s apartment is very nice, but small, and it is furnished primarily with furniture given to them by some of his friends. Soon after getting married,…arrow_forward
- The Financial Statements of harry and Belinda Johnson Suggest Budgeting Problems Harry has worked at a medium-size interior design firm for five years and earns a salary of $4,080 per month. He also receives $3,000 in interest income once a year from a trust fund set up by his deceased father’s estate. Belinda earns a salary of $6,400 per month, and she has many job-related benefits including flexible benefits program, life insurance, health insurance, a 401(k) retirement program, workplace financial education, and a credit union. The Johnsons live in an old apartment located approximately halfway between their places of employment. However, their rent will increase by $100 a month in July. Harry drives about ten minutes to his job, and Belinda travels about 15 min- utes via public transportation to reach her downtown job. Harry and Belinda’s apartment is very nice, but small, and it is furnished primarily with furniture given to them by some of his friends. Soon after getting married,…arrow_forwardA father is now planning a savings program to put his daughter through college. She is 13, plans to enroll at the university in 5 years, and she should graduate 4 years later. Currently, the annual cost (for everything - food, clothing, tuition, books, transportation, and so forth) is $15,000, but these costs are expected to increase by 6% annually. The college requires total payment at the start of the year. She now has $9,000 in a college savings account that pays 8% annually. Her father will make six equal annual deposits into her account; the first deposit today and sixth on the day she starts college. How large must each of the six payments be? (Hint: Calculate the cost (inflated at 6%) for each year of college and find the total present value of those costs, discounted at 8%, as of the day she enters college. Then find the compounded value of her initial $9,000 on that same day. The difference between the PV of costs and the amount that would be in the savings account must be…arrow_forwardSuppose that a young couple has just had their first baby and they wish to ensure that enough money will be available to pay for their child's college education. Currently, college tuition, books, fees, and other costs, average $12,500 per year. On average, tuition and other costs have historically increased at a rate of 4% per year. Assuming that costs continue to increase an average of 4% per year, how much is the tuition and other costs for one year for this student in 18 years when she enters college?arrow_forward