Analysis and Decision-Making Case Willa had barely left the building after her second job interview when...

  

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Analysis and Decision-Making Case Willa had barely left the building after her second job interview when she received a call-she got the job! She immediately called her friend Blake. Willa: "Blake, can you believe that I'm going to be making some real money starting in September? I can't wait until I can have some financial freedom to actually do a few fun things and not feel guilty about it." Blake: "You realize you're still going to have bills to pay, right? And your student loans won't just pay themselves off?" Willa: "Of course, I know that. But still, there will be plenty left over once I cover my expenses." To see if Willa in fact will have "plenty left over," she has been advised to put together a 6-month budget to plan cash inflows and outflows. For her budget. Willa must consider the following details. 1. She will be working in Houston, Texas. Her start date is September 1, 2024. 2. She will make $50,000 per year before tax withholdings. The effective federal income tax rate on $50,000 is 9%, and FICA taxes (Social Security and Medicare) total 7.65%. She will be paid on the 15th and 30th of each month. 3. Willa currently has $1,000 in her bank account. 4. Willa will rent an apartment of her choosing, and she is open to having a roommate to help with expenses. Rent will be due on the first of every month and paid with cash. Willa will need to consider moving costs as well as any household furniture/necessities as part settling into her new apartment. If basic utilities aren't included in the rental cost (per details from the housing website she uses), then she must estimate and include them. Assume Willa currently lives three hours away from Houston by car. 5. She has a credit limit of $2,000 on her only credit card, with a 19% APR. The minimum monthly credit card payment is $150, interest included. She may pay the balance in full each month, but she doesn't have to. If she doesn't use the card, she owes nothing. Using the credit card is just an option. 6. If she already owns a car, then this item can be ignored. If she wants or needs to own a car, or if she wants to upgrade her current car, she must choose one of the following options. • Zero down payment, with a $500 minimum monthly payment. • $1,500 down payment, with a $300 minimum monthly payment. . $2,500 down payment, with a minimum monthly payment of $200. 7. Any cash support from her family/friends must come in the form of a loan, bearing interest at 6%, wherein she must make regular monthly principal repayments of 10% of the amount leaned to her, plus the correct amount of interest. She does not have to accept a loan from anyone-it's just an option. It is also acceptable to state that she will receive certain gifts/monies during festive occasions during the year. 8. She must acquire at least three of the ten items listed below. She can obtain these items in any legal way that she chooses, except that she cannot be "given" any of them. (Provide adequate support for the bud- geted amounts of these items.) Car . . • Work attire . Couch or comfy chair Dishes, cutlery, pots, pans . Kitchen table and chairs Cleaning supplies and vacuum Computer/laptop and printer Bed/frame/mattress . . • TV and TV stand/wall mount • Chest of drawers or desk 9. Willa must also include the following items in her monthly budget. • Cell phone plan. • Streaming service and Internet (if not already included with rent or utilities above; if included, that should be clearly stated). • Food. (Do not use any online estimates/food guides to come up with your budgeted monthly food expenditures.) • Entertainment. Consider a wide variety of entertainment, including movies, sporting events, and travel. • Fuel costs (if she has a car), with mileage calculations using $2/gallon. • Car maintenance costs (if she has a car). • Insurance. Car insurance (if she has a car) and renter's insurance for her belongings. . If she chooses not to have a car, Willa must budget for other modes of transportation. • Medical expenses. Health insurance, as well as prescription costs and co-pays for doctor visits. • Willa has a required $300 monthly payment for student loans, interest included. . Savings. To be easily accessible and separate from both her checking account and retirement contributions. • Retirement contributions. These are separate from savings, since they are for the distant future. • Charitable contributions. She has discretion as to the amount and frequency, but she should consider them. If she chooses not to make charitable contributions, that should be indicated. • Gifts for others. Willa, again, has discretion as to the amount and frequency, but she should consider them. 10. There are many other costs Willa will incur in her real life (haircuts, salon visits, tolls, parking fees, dry cleaning). Include at least one of these other types of costs in addition to the long list above. Required a. Help Willa put together a monthly cash budget that includes six months of budgeted cash inflows and outflows starting on September 1, her first day on the job. This is best done using six columns (one for each month) in an Excel spreadsheet. b. Provide a listing of Willa's total assets and total liabilities at the end of her six-month budget period. A full balance sheet is not required; rather, provide just a straightforward listing of her budgeted assets and lia- bilities and their corresponding dollar values at the end of February 2025. This will help her identify her personal financial position after six months of work. c. Include supporting documentation, assumptions, estimates, and calculations for all amounts. Analysis and Decision-Making Case Willa had barely left the building after her second job interview when she received a call-she got the job! She immediately called her friend Blake. Willa: "Blake, can you believe that I'm going to be making some real money starting in September? I can't wait until I can have some financial freedom to actually do a few fun things and not feel guilty about it." Blake: "You realize you're still going to have bills to pay, right? And your student loans won't just pay themselves off?" Willa: "Of course, I know that. But still, there will be plenty left over once I cover my expenses." To see if Willa in fact will have "plenty left over," she has been advised to put together a 6-month budget to plan cash inflows and outflows. For her budget. Willa must consider the following details. 1. She will be working in Houston, Texas. Her start date is September 1, 2024. 2. She will make $50,000 per year before tax withholdings. The effective federal income tax rate on $50,000 is 9%, and FICA taxes (Social Security and Medicare) total 7.65%. She will be paid on the 15th and 30th of each month. 3. Willa currently has $1,000 in her bank account. 4. Willa will rent an apartment of her choosing, and she is open to having a roommate to help with expenses. Rent will be due on the first of every month and paid with cash. Willa will need to consider moving costs as well as any household furniture/necessities as part settling into her new apartment. If basic utilities aren't included in the rental cost (per details from the housing website she uses), then she must estimate and include them. Assume Willa currently lives three hours away from Houston by car. 5. She has a credit limit of $2,000 on her only credit card, with a 19% APR. The minimum monthly credit card payment is $150, interest included. She may pay the balance in full each month, but she doesn't have to. If she doesn't use the card, she owes nothing. Using the credit card is just an option. 6. If she already owns a car, then this item can be ignored. If she wants or needs to own a car, or if she wants to upgrade her current car, she must choose one of the following options. • Zero down payment, with a $500 minimum monthly payment. • $1,500 down payment, with a $300 minimum monthly payment. . $2,500 down payment, with a minimum monthly payment of $200. 7. Any cash support from her family/friends must come in the form of a loan, bearing interest at 6%, wherein she must make regular monthly principal repayments of 10% of the amount leaned to her, plus the correct amount of interest. She does not have to accept a loan from anyone-it's just an option. It is also acceptable to state that she will receive certain gifts/monies during festive occasions during the year. 8. She must acquire at least three of the ten items listed below. She can obtain these items in any legal way that she chooses, except that she cannot be "given" any of them. (Provide adequate support for the bud- geted amounts of these items.) Car . . • Work attire . Couch or comfy chair Dishes, cutlery, pots, pans . Kitchen table and chairs Cleaning supplies and vacuum Computer/laptop and printer Bed/frame/mattress . . • TV and TV stand/wall mount • Chest of drawers or desk 9. Willa must also include the following items in her monthly budget. • Cell phone plan. • Streaming service and Internet (if not already included with rent or utilities above; if included, that should be clearly stated). • Food. (Do not use any online estimates/food guides to come up with your budgeted monthly food expenditures.) • Entertainment. Consider a wide variety of entertainment, including movies, sporting events, and travel. • Fuel costs (if she has a car), with mileage calculations using $2/gallon. • Car maintenance costs (if she has a car). • Insurance. Car insurance (if she has a car) and renter's insurance for her belongings. . If she chooses not to have a car, Willa must budget for other modes of transportation. • Medical expenses. Health insurance, as well as prescription costs and co-pays for doctor visits. • Willa has a required $300 monthly payment for student loans, interest included. . Savings. To be easily accessible and separate from both her checking account and retirement contributions. • Retirement contributions. These are separate from savings, since they are for the distant future. • Charitable contributions. She has discretion as to the amount and frequency, but she should consider them. If she chooses not to make charitable contributions, that should be indicated. • Gifts for others. Willa, again, has discretion as to the amount and frequency, but she should consider them. 10. There are many other costs Willa will incur in her real life (haircuts, salon visits, tolls, parking fees, dry cleaning). Include at least one of these other types of costs in addition to the long list above. Required a. Help Willa put together a monthly cash budget that includes six months of budgeted cash inflows and outflows starting on September 1, her first day on the job. This is best done using six columns (one for each month) in an Excel spreadsheet. b. Provide a listing of Willa's total assets and total liabilities at the end of her six-month budget period. A full balance sheet is not required; rather, provide just a straightforward listing of her budgeted assets and lia- bilities and their corresponding dollar values at the end of February 2025. This will help her identify her personal financial position after six months of work. c. Include supporting documentation, assumptions, estimates, and calculations for all amounts.

Answer rating: 100% (QA)

Monthly Cash Budget Month Cash Inflow Cash Outflow Net Cash Flow September 4167 5333 1166 October 4167 4250 83 November 4167 4367 200 December 4167 4483 316 January 4167 4600 433 February 4167 4717 55... View the full answer