This project will emphasize personal finance problems. Complete and show all ste
ID: 358195 • Letter: T
Question
This project will emphasize personal finance problems. Complete and show all steps. Again you will submit a spreadsheet showing your work. Each problem should be answered on a clearly labeled separate worksheet of a spreadsheet. Answers should be formatted in a manner that makes the answers clear and easy to read. Each of the following Excel functions should be used to calculate at least one of the answers: FV, PV, PMT, RATE, NPER, NPV, AVERAGE, STDEV, and IRR. Calculating the answers elsewhere and typing or pasting them into the spreadsheet is unacceptable. When turned in, the spreadsheet project should be a single file readable in Microsoft Excel.
Cash flows It is typical for Jane to plan, monitor, and assess her financial position using cash flows over a given period, typically a month. Jane has a savings account and her bank loans money at
6 %
per year while it offers short-term investment rates of
5 %
Jane's cash flows during August were as follows: See Table below
a. Determine Jane's total cash inflows and cash outflows.
b. Determine the net cash flow for the month of August.
c. If there is a shortage, what are a few options open to Jane?
d. If there is a surplus, what would be a prudent strategy for her to follow?
Table to use
Item
Cash inflow
Cash outflow
Clothes
$1,200
Interest received
$440
Dining out
$450
Groceries
$780
Salary
$4,500
Auto payment
$335
Utilities
$260
Mortgage
$1,290
Gas
$202
Item
Cash inflow
Cash outflow
Clothes
$1,200
Interest received
$440
Dining out
$450
Groceries
$780
Salary
$4,500
Auto payment
$335
Utilities
$260
Mortgage
$1,290
Gas
$202
Explanation / Answer
a. Determine Jane's total cash inflows and cash outflows.
Total Cash inflow= Interest received + Salary = $440+$4,500= $4940
Total Cash outflow = Clothes + Dining out + Groceries + Auto payment + Utilities + Mortgage + Gas
= $1,200+$450+$780+$335+$260+$1,290+$202 = $4315
Total Cash inflow= $4940
Total Cash outflow= $4315
b. Determine the net cash flow for the month of August.
Net Cash Flow = Cash Inflow- Cash Outflow= $4940-$4315= $625
c. If there is a shortage, what are a few options open to Jane?
If there is a shortage then Jane will have to control her expenditures and lower the cash outflow. She can also apply for loan in a bank which is vailable at 6% rate.
d. If there is a surplus, what would be a prudent strategy for her to follow?
If there is a surplus then she should try to save that amount by putting the amount into bank which offers short-term investment rates of 5 %. If the surplus is not enough to invest in bank then keep it in saving account as it also earns some interest. By using this amount, she can also reduce existing debts if she holds any.
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