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Tamara earns $8 an hour at her job working 25 hours per week. If 22% of her paycheck goes to taxes, what is Tamara's monthly cash inflow? (Assume this is her only source of income and that there are 4 pays per month.)
$624
Barry gets hurt at work and must go on disabililty for 4 months. On disability, the pay that Barry receives is 60% of his normal net pay. Barry should be fine if he has a plan for _____.
managing his liquidity
Planning for the possibility that the plumbing in your house needs repair is part of a plan for _____.
managing liquidity
Kyle and Linda are married with two children at home and a mortgage. Kyle's net pay per year is $32,000 and Linda's is $48,000. Their monthly expenses are $3,500.
Kyle and Linda each contribute 15% of their earnings to a retirement fund and they have $5,000 in savings. They also have a $100,000 life insurance policy on Kyle, but none on Linda.
As their financial advisor, what part of Kyle and Linda's financial plan would you encourage them to work on and why?
Their plan for protecting their assets.
They should have life insurance on Linda.
Create an example of a situation where there is a negative cash flow.
Answers will vary, but the cash inflow should be less than the cash outflow.
Which of the following would you list under cash inflows in a financial plan?
You received a bonus at work.
Ted is a single guy who's living the good life. The spreadsheet below shows Ted's cash flow for a month.
Based on his monthly cash flow, explain what part of Ted's financial plan might be missing and why.
Ted's net cash flow is zero. Therefore, he might want to work on managing his income to get a positive net cash flow. There is no indication that Ted is putting any money in savings.He might want to work on his plan for managing his liquidity so he is prepared for an emergency.
If there is a positive correlation between number of years of education and the amount of vacation time, which of the following careers would you expect to have the most vacation time?
pharmacist, docotorate degree
Frank and Lynn are co-workers getting paid the same salary. They both decide to quit their jobs and start going to school on the same day. Frank gets a degree after just 18 months and spends $6,500 dollars on his education. Lynn only spends $3,500, but it takes her 2 years to get her degree. Assuming that they each will make $6,000 more per year after graduating, which of the following is true?
Frank will recover his investment at an earlier date than Lynn.
In order to go to college, Hank goes from working full-time making $28,000 per year to working part-time at half the salary for two years. The cost of his education will be $5,000. If Hank makes $33,000 per year after getting his degree, approximately how many years will it take him to recover his investment?
6.6
Jesse works for an engineering firm earning $54,000 per year. Jesse is 53 years old and plans on retiring at age 65. He?s considering working part-time so that he can work on another degree. His new degree would take him 3 years to earn and cost a total of $30,000. After getting the degree, Jesse will make $75,000 per year.
Do you think that the new degree is worth the investment? Explain your reasoning.
Jesse will spend $111,000 to earn the degree: 3 years loss of 1/2 his salary + cost of education = 3(27,000) + 30,000 He will make $21,000 per year more after earning his degree, so it will take a little over 5 years to recover his investment. This means that he will work an additional 4 years making $21,000 more per year for a total of $84,000, so it seems like a wise investment.
Alistar has an annual income of $25,000. He decides to take classes on line and at night so that he can continue to work. After 3 years he gets his degree and immediately starts earning $32,000 per year. If it takes Alistar 6 years to recover his investment for his education, how much did it cost him?
$42,000
Brenda has an associate's degree earning the median salary. She wants to quit working and go to college to get just a basic bachelor's degree. If she completes her degree in 2 years and it costs $15,000, how long will it take her to recover her investment assuming that she earns the median salary?
almost 8 years
Neil decides to go to a technical college for 18 months to get a degree in computer networking. There are 6 school quarters in the program with a tuition of $530 each. Books for the entire program cost $1,800. How much will it cost Neil to get his degree?
$4,980
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