Ch $03$: Homework Problems $-$ Financial Statements, Tools, and Budgets

Do the Math $3-6$

Budgeting and Income Projections

Leyia and Larry Hartley of Columbus, Ohio have decided to start a family next year, so they are looking over their budget $($illustrated in Table $3-5$ as the "young

married couple"$).$ Leyia thinks that she can go on half$-$salary $($ $$2,400$ instead of $$4,800$ per month$)$ in her job as a college textbook sales representative for about

$18$ months after the baby's birth; she will then return to full$-$time work.

a$.$ Looking at the Hartley's current monthly budget, identify categories and amounts in their budget where they realistically might cut back $$2,400.($Hint:

Federal and state taxes should drop about $$600$ a month $($ $$7,200$ annually$)$ as their income drops.$)$

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

b$.$ Assume that Leyia and Larry could be persuaded not to begin a family for another five years. What specific budgeting recommendations would you give

them for handling $($i$)$ their fixed expenses and $($ii$)$ their variable expenses to prepare financially for an anticipated $$2,400$ loss of income for $18$ months as

well as the expenses for the new baby?

The input in the box below will not be graded, but may be reviewed and considered by your instructor.

c$.$ If the Hartley's gross income of $$8,830$ rises $5$ percent per year in the future, what will their income be after five years? Round Future value of a Single

Amount in intermediate calculations to four decimal places. $($Hint: Use Appendix A$-1$ or the Garman$/$Forgue companion website.$)$ Round your answer to

the nearest dollar.

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