Question # 00556439 Posted By: Prof.Longines Updated on: 07/04/2017 02:40 AM Due on: 07/04/2017
Subject Computer Science Topic Algorithms Tutorials:
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After studying the three previous unit’s chapters, the student is asked to select a topic and prepare an outline for the end of course comprehensive financial plan/project. The student is asked to submit this outline for unit discussion. The best way to prepare this document and start the process off is to review the chapters in the book and choose one that interests you, a topic that will benefit you personally. Makes a lot more sense that way, if one studies what one can and will use!

An outline is required to be submitted for discussion in Unit 4. The outline can be bullet format, topical outline or paragraph form. One page, double spaced maximum limitation on length.This time allow for a comprehensive review of the material we have covered to date. We will also submit and post in the Discussion area an outline or proposal for your project. This should be cover an aspect of personal finance that you feel will assist you in the management of your own financial situation. For instance, how to eliminate unnecessary debt burdens, or how to save for retirement, or how to complete your own tax returns.

Chap 1:

This unit covers chapters 1, 2 and 3 in the text. The concept of the "time value of money" basically asks us to compare the worth of a certain sum of money now vs. a later point in time. This is compared to the possibility of making other investments, current spending or future spending that can be made with the money to determine our course of action. For instance, most people make a down payment to buy a home. This money could have been placed in a mutual fund and earned a certain amount of interest over the next 30 years instead of going towards your home purchase. However, if you don't purchase the home you still must live somewhere for the next 30 years so the home may be valuable enough to you where it is going to be worth more over the long haul than the money would be worth had you invested it.

Also should you pay off a loan? Do you keep funds in an investment medium earning say 5% interest when you are paying 18% plus on that old credit card?????

This is of course very simplified but every time we spend money this is basically the process we are going through. We are making a decision that whatever we are purchasing has a value that is greater than the time value of what we are spending for it. Even when purchasing a cup of coffee, [ we have entered the realm of economics known for me at least an inelastic demand item!!] we've made a decision that the benefit of the coffee outweighs the time value of the .89 cents that I have spent for it.

I for one can point to countless times that I didn't go through this evaluation process carefully enough. I make purchases without really considering the time value of what I'm spending. This is why I often say to myself "If I had back all the money I've wasted on ... I'd be rich." or "if I'd started adding to my 401K at 22 instead of 29 ..." Of course, hindsight is always 20/20 as Joe Namath used to say. And are we truly wise enough when younger to make decisions that will affect our financial life decades down the road? Well those decisions, right or wrong have to be made. Better make them with some skill and forethought and knowledge.

The text also discussed opportunity costs. This brings to my mind my mother who combs the Sunday paper looking for sales and coupons and may spend 2-3 hours each week organizing all of this information and then may use a full tank of gas driving from one end of town to the other. This is so that she can get each and every item at the lowest possible price. She saves a lot of money by doing this. However, she saves this money at the cost of her time, gasoline and effort that could be put into something more fun. Of course, maybe this is "fun" to mom! An intangible benefit to her. Gets to see her buddies as she cruises the town I guess.

Lifetime earnings of college graduates is about 75% higher that high school only graduates. The monetary cost and opportunity cost of spending the 4 years in college are outweighed by the benefits. A college education opens up a wider variety of job opportunities. I can't count how many positions I've seen posted and thought sounded great for me and the degree requirement shut me out.

It would be interesting to find out the yearly average cost of not having a college education. For example what are the lifetime expected earnings potential for a person who graduates from college at 22 vs. 32? How much is lost in that time frame?

Chap 2:

For unit 2 we will investigate the many facets of the credit industry, chapters 4 and 5. From this background we will move onto the aspects of managing your own personal credit as an informed consumer. Some of the tools that are required to assist one in making intelligent decisions regarding the many areas of personal finance, particularly the time value of money and the cost of various credit arrangements will be explored. The economic ramifications of inflation and what this means for the credit consumer will also be addressed. All of which will assist one in making a more informed responsible decision. Other topics of interest will be addressed also.

One of the key factors in finance is ROI is simply the after tax return on your "principle" investment. It is a very much used concept in almost all aspects of finance. Businesses use it all the time, ROI drives a lot of business decisions. Whether to retain, expand or divest of either a business product, or segment; one of the main analytical tools used is that of ROI. Unfortunately the tool has its limitations. The further we look into the future the less clear our vision becomes. So to speak. And now days the future is not defined like it was say 20 years ago. The future arrives much sooner. Decisions are made with a much shorter focus, if you will. And "qualitative issues", particularly those affecting people are much more difficult to factor into some quantitative tool.

Chap 3:

In this unit we will concentrate on chapters 6 and 7 in the text. These chapters cover consumer purchasing strategies and legal protections.

This is a topic that help us all. The text address strategies for ranking the quantitative and qualitative aspects of a decision. Budgeting, on-line buying, and legal issues. Legal issues should be taken care of up front. Hate to say this, but running major purchases by an attorney can help to prevent some real sticky issues down the road. If someone tells you something, no you don't have to do this, yes that is ok. GET IT IN WRITING!!!! No matter who they are. Your insurance agent you have know for 20 years, get it in writing. Send a letter "confirming" the issues addressed and ask for a written "confirmation" if nothing else. Might save you a bundle!

When deciding to lease or purchase any item, whether it is a house or a car, a few items must be taken into consideration. The first being what your personal needs/wants are and are you able to comfortably afford whatever you chose. Let's take a look at the lease vs. purchase of a home.

When deciding to purchase a home you must make the following selections/choices:

1. Can I afford a home in a safe/nice neighborhood?

2. What is the school system like? (If I already have children)

3. Is this a permanent residence? How long?

4. Can I afford a down payment?

5. What are the opportunity costs of the down payment?

6. Can I afford the fixed ownership costs of taxes, insurance, and fees?

7. Can I afford the variable costs of operating a home (repairs, maintenance, gas and electric, lawn care)

Along with home ownership comes advantages and disadvantages. Some of the advantages include deducting property taxes, mortgage interest, building your credit rating and building equity. Some of the disadvantages are higher living costs associated with the variable and fixed operating costs and real estate taxes. As the years pass, you may out grow your house and you then have the headache or the ease of selling your current home. Now that we have taken a look at home ownership let take a look at the option to lease property.

When deciding to lease vs. purchase property you must ask yourself a few question also.

1. What is the security deposit required?

2. What are the monthly rental payments?

3. What is the opportunity cost of the security deposit?

Some of the advantages of leasing include:

1. Mobility

2. Fewer maintenance responsibilities

3. Lower initial costs

Some of the disadvantages of leasing are:

1. No financial benefits

2. Restricted lifestyle

3. Legal concerns of a lease

4. No return on your security deposit

5. Move out costs beyond normal wear and tear

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Tutorials for this Question
  1. Tutorial # 00553890 Posted By: Prof.Longines Posted on: 07/04/2017 02:41 AM
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    The solution of CS 322 OUTLINE WEEK 4 ASSIGNMENT...
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