Assignment: Financial Analysis
This assignment will assess Competency 2. Examine fundamental topics of current financial management.
Directions: For this assignment, you will analyze your own financial situation with one addition, you have inherited $1 million dollars from a long lost relative (tax free)! There is one caveat with the money, you can't spend it on whatever you want. Use the Personal Balance Sheet and follow the bulleted items below to work through your financial obligations and opportunities that the $1 million brings.
• You MUST first take care of current responsibilities (liabilities), things like a mortgage, credit card debt, current or past bills, car loans, etc. Include a detailed discussion on your current obligations to be taken care of first with the $1 million. Consider the total dollar amount for current obligations and begin deducting your finances from the $1 million (on the Balance Sheet).
• Next, consider the future, look at how you can make the money work for you. Consider what you would put into things like investments, retirement, property, etc. Be sure to reference the risk and return websites you searched in the Learning Activities, this may help you to decide whether to weigh the risk, or to settle on a less risky investment.
• Next, look at any physical assets you may wish to invest. A new home, or possible rental properties, maybe gold or silver, or another type of commodity. Again, weigh the risk and return to make sure the investment is worth your money.
• When you get to the end, if you have a balance remaining, you will need to decide what to spend it on within the items you already considered (i.e. if you purchase a house, you may wish to set aside the excess into a money market account, cd, or other interest earning account to help pay for yearly taxes or insurance on the house). So this could be as easy as setting up a savings account or something along those lines.
• Reference any and all source materials used to analyze your financial situation (i.e. textbook, websites, financial publications, and other resources available through the library)
The case analysis should be at least 2 pages in length, a completed Personal Balance Sheet should accompany the submission.