ASSIGNMENT 04C07J Personal FinanceDirections: Be sure to save an electronic copy of your answer before submitting it to Ashworth College for grading. Unless otherwise stated, answer in complete...

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Answer To: ASSIGNMENT 04C07J Personal FinanceDirections: Be sure to save an electronic copy of your answer...

Sandeep answered on Oct 22 2022
55 Votes
Assignment 04
Part A: 1
Allison Monthly Cash Inflow After Tac (CFAT)     = $ 3,000
Total Cash Inflow After Taxes              $ 3,000
Less:    Cash Outflows/Monthly Expenses
· Rent Expenses                    = $ 750    
· Student Loan Payment             = $ 200
· Utilities                    = $ 150
· Food                         = $ 300
· Recreation                     = $ 600
· Car Expenses                    = $ 200
· Clothing                     = $ 150
Total Cash Outflow/Monthly Expenses    = $ 2,350
Formula Net Cash Flow for Current month = Monthly Cash Inflow after Taxes – Cash Outflow/Monthly expense
Net Cash Flow = $ 3,000 - $ 2,350    = $
650
Part A: 2
Allison Monthly Cash Inflow After Tax (CFAT)     = $ 3,000
Total Cash Inflow After Taxes              $ 3,000
Less:    Cash Outflows/Monthly Expenses
Total Cash Outflow/Monthly Expenses    = $ 4,000
    Deficit                         ($ 1,000)
Has the following options to cover the deficit in June or to meet her financial obligations as follows:
· Sell some of the assets she might be holding at that moment to meet the cash financial obligations, because in case of inability to meet them or defaulting would label her as delinquent. This would severely impair her credit rating.
· Increase the working hours or work overtime to raise her wages/salary in that month to cover the ballooning expenses in the month of June. Since she will need some money to meet contingencies.
The impact of these options on her Assets and liabilities are as under:
· Selling assets to meet excess expenses will reduce her asset base and bring in more cash realized from liquidating assets.
· While working overtime will not have any effect on the assets or liabilities but it will impact her Income statement.
Part B:
· Credit Card impacts our Personal budget in many ways as it is responsible for getting us off track in many ways when we are following our discipline.
· Credit cards give us the freedom to spend at least 3 times our current income levels or overshoot our budgets which can derail our personal budget commitments. Here you are actually not expending your physical cash, so it doesn’t hurt or sink in. Basically, it multiplies your capacity to spend or income level.
· Credit card gives you fall sense of complacency that you are uber-rich and can afford almost everything under the sun. This feeling is very not good for anyone.
· Credit card gives you the advantage to accumulate reward points which can later be redeemed against purchases or exchanging gifts thus saving cash flows in the future.
· There are several Credit card apps that help manage Credit card spending by employing their analytical abilities in forecasting repetitive expenses.
The credit card also affects our Income statement negatively in that piling up liabilities and cash outflows, restricting the net cash flow available.
Credit card leverages the Income statement in that Banks use card holder’s income level to decide their Card limits. Thus, higher income and higher spending limits trap us in a vicious debt trap.
Credit card impacts the Income statement in that Interest charged on the card add to liability and in event of default can severely affect our card score or history.
Credit Card impacts the Balance sheet in the way that it creates liability in the name of the person to whom the name credit card is issued and who uses the card for spending. Since the cardholder gets the right to spend the money up to the card limit and pay within the credit period.
Credit card debt is a current liability since it will have to be discharged within the credit period of 45 days or a normal business cycle which is short term liability.
After the normal credit periods if the payment is still due, one may have to record the Interest payment being fully payable along with the principal due on the current liability.
Part C
Advantages of selling the home instead of hiring a realtor:
Biggest pro being that it helps save the precious dollars in form of Realtor’s cut/commission.
It helps the seller to stay in control in form of negotiating the price, when to put on sale or when to remove the display.
Being seller, you have comprehensive and direct knowledge of the property so that you can answer any queries and satisfy the buyer to heart’s contention.
Disadvantage:
Selling the house is big and emotional decision for some buyer, hence some buyer might overprice or under-price as well refuse to counter an offer in the desperation to sell
Selling a house is a full-time job and requires lot of knowledge of the real estate market in the neighbours as well requires completing lot of formalities which can be handled better by realtors.
Buyers only have limited reach in terms of selling by word or registering online, whereas the realtors have a large access network due to their being in the business or better reach amongst prospective customers.
ASSIGNMENT 08:
Part A:
Steps to take to evaluate and choose health care insurance options:
First of all, we should determine the purpose and objective of the health care plan meaning what it should cover like an accidental or plain vanilla plan. This means researching what kind of plans are available in the market, the premiums it offers, or whether the employer offers the health plan.
Next is deciding whether we should buy a family comprehensive plan including elderly/senior citizens of the family or cover some members by comparing the premiums rate across the various insurance companies. What benefits does this plant offer against the others and what is its success rate including the field network, and any grievances raised by other buyers against them? Also, whether there is an option of making premium...
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