FIN 502 Chapter Notes - Chapter 4: Credit Card Interest, Day Care, Income Statement
Document Summary
1. (a)(b) see also the attached cash flow projections. Inflation at 2% approximately for everything but loans (which are fixed by contract), licences, social club minimum spending, anne"s income and extra christmas expenses. The loans must stay fixed, but the assumption is arbitrary for all other items. The extra interest income that would be earned on the increased cash from august on is not included. Thus, the interest income assumes a minimum monthly balance of ,000 at. Add csb interest of and , for a total interest income of . Since both his pay and the property taxes are increasing by 2%, this rate of inflation is reasonable. For a single year, it would not matter if students ignored inflation. Credit card debt is only current balance in future; so no credit card interest. Day care is 50 weeks per year: 50 x 65 = 3,250 for 2004, or 276. 25 per month for 2005 (assuming two weeks vacation off).
