Personal Finance

Running head: PERSONAL FINANCE
Personal Finance
Name of the Student:
Name of the University:
Author’s Note:

2PERSONAL FINANCE
Table of Contents
Mini Case 1......................................................................................................................................3
Question A...................................................................................................................................3
Question B...................................................................................................................................3
Mini Case 2......................................................................................................................................3
References........................................................................................................................................5
Appendix..........................................................................................................................................6

3PERSONAL FINANCE
Mini Case 1
Question A
The amount that must be deposited today for receiving an amount of $2600 at the end of
each month would be around $87,207.82. The interest rate taken into account for the purpose of
the analysis would be around 4.75% per annum compounded monthly. The monthly interest rate
was determined for determining the net amount payable today for a sum period of 36 months.
The monthly interest rate would be around 0.39%. The computation of the same was done with
the help of the monthly payment and the compounding the same amount for every period of time
for determining the actual payment of the proposed plan.
Question B
The amount that must be deposited every month for receiving the funds after 30 years of
time-frame would be around $33,216.46 and the same could be accounted for the annual
payment that would be payment for making a lump sum payment of 3 million. The interest rate
that was taken into consideration for the purpose of the analysis was 6.75% and the future value
of the annual payment was done for determining the net lump sum amount after 30 years of time.
The monthly payment was compounded at an annual rate of 6.75% on the yearly investment
done. The final yearly payment was determined with the help of the PMT formula in the excel
and the amount was compounded for a sum of thirty years for determining the final closing
balance at the end of each year.
Mini Case 2
1) The personal financial statement for Tia was prepared with the help of the various heads
of the income and expenses that will be incurred by Tia. The classification of the income

4PERSONAL FINANCE
and the expenses was done in accordance with the nature and characteristics of the
transactions (Chan and Rate 2018).
2) The current financial position of the Tia could be well predicted with the help of the ratio
analysis, which was done by including the various accounts and transactions done by the
Tia.
Ratio Analysis
Savings Ratio 3.23% Equity/Accumulated Funds 80125
Income
83,030.2
5 Total Assets
36970
0
Expenses
80,430.0
0 Net Worth Ratio 22%
Debt Service Ratio 0.95% Current Assets 5500
Net Operating Income 2,600.25 Current Liabilities 14575
Debt Service 275000 Liquidity (Current Ratio) 0.38
The savings ratio of Tia was found to be only 3.23%, which was very low, on the other
hand the debt service ratio was also found to be very low for Tia. Tia also need to focus
on the liquidity position by maintain adequate current assets in contrast to the current
liabilities of the company (Johari et al. 2018).
3) The financial budget for Tia for the year 2019 was done by accounting for the major
expenses that will be incurred by Tia will be taken from the base year figures, which has
been grown at 6% per year. The proposition planned by Tia for saving $4500 towards
overseas holiday does not seem realistic as the net income, which she could get after
accounting for all the major expenses, and income is around $3505.95. She need to
increase her source of income or reduce the level of expenses for getting the desired
results (Muda and Hasibuan 2018).