Which expenses would be easiest to reduce or eliminate

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Reference no: EM133475482

Homework: Finance Future and Present Value Annual Interest

Introduction

Chapter 4, "Evaluating Choices: Time, Risk, and Value," introduces the critical relationships of time and risk to value. It demonstrates the math, but focuses on the role those relationships play in financial thinking, that is, in evaluating choices for comparisons in making financial decisions.

Reading

Read Chapter 4 of the Personal Finance textbook by Rachel Siegel and Carol Yacht

Learning Journal Task

For this Learning Journal, choose one of the following. Be sure to read all three choices before answering.

Question 1. Prepare a personal income statement for the past year, using the same format as Alice's income statement in this chapter. Include all relevant categories of income and expenses.

Question 2. What does your income statement tell you about your current financial situation?

Question 3. For example, where does your income come from, and where does it go?

Question 4. Do you have a surplus of income over expenses? If, so what are you doing with the surplus?

Question 5. Do you have a deficit?

Question 6. What can you do about that?

Question 7. Which of your expenses has the greatest effect on your bottom line?

Question 8. What is the biggest expense?

Question 9. Which expenses would be easiest to reduce or eliminate?

Question 10. How else could you reduce expenses?

Question 11. Realistically, how could you increase your income?

Question 12. How would you like your income statement for the next year to look?

Question 1. In My Notes or your financial planning journal, identify a future cash flow. Calculate its present value and then calculate its future value based on the discount rate and time to liquidity. Repeat the process for other future cash flows you identify. What pattern of relationships do you observe between time and value?

Question 1. What is the present value of CD with 4% annual interest that matures in 1 year with a value of $3000? If you had $3,000 right now, with the same rates for the same amount of time, can you calculate its future value? What factor would determine which value you chose to use?

Reference no: EM133475482

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