21st Century Student FinLit -Getting Personal SW

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12. A business plan provides business goals and important details, such as revenue targets, time lines and the specific action steps the business will take to reach the goals. They are selling a franchise. 13. The SBA is an independent agency of the federal government — they can’t “join” it! They should consider becoming a member of the U.S. Chamber of Commerce or a professional toy or therapeutic play association. 14. A profit margin is a measure of how much out of every dollar of sales a company actually keeps in earnings. It’s a profitability ratio. It is calculated by deducting expenses from revenue which equals gross profit, then dividing gross profit by revenue. In this case the profit margin is 35%.

10. C 11. Business plan. 12. F 13. Businesses can expand their core operations such as adding locations. They can also expand by diversifying their products or services such as yoga mats, workout gear, etc. 14. A profit margin is a measure of how much

the grace period.

7. 8. 9.

March 23

April 20

During the grace period between March 23 and April 20.

10. 8 years (!) 11. about $1000 (!) 12. A late payment fee. 13. Purchases = 14.99% Cash advance =

out of every dollar of sales a company actually keeps in earnings. Revenues - expenses = gross profit. Gross Profit/ Revenue = profit margin. 15. D 16. B 17. D 18. I just talked to Lisa in Human Relations. She has candidates for the Information Technology and Customer Relations Manager/ment positions. By the way, our Search Engine Optimization efforts and Social Media Marketing campaign are going well. 19. It’s a potential source of an income stream in addition to employment, you are the boss and have a lot of control over how the business is managed and grown, you can do the kind of work you like to do, you can work from home (often); you are investing in you, there is potential that the business will increase in value and build wealth. 20. There’s always a financial risk, there’s a risk that you won’t make enough money, work time/hours can be much longer than if you were employed by another company, a small business owner must wear many management hats: money manager, IT, HR, Customer Relations, etc. PRODUCT PREVIEW 14. 4 15. C 16. D 17. T 18. D 19. B 20. F 21. A 22. 58 months; total $1073.41 1. 2.

21.99% Balance transfer = 00% This low balance transfer “teaser rate” rate usually expires after some promotional period.

15. They can reduce costs.

Business Plan Perfection

Student’s discretion.

Small Biz Whiz Survey

Student’s discretion.

A Closer Look at Credit Cards There’s an introductory APR of 12.99% depending on the cardholder’s creditworthiness going to 14.99% in a year, a balance transfer APR, penalty APR and a balance transfer APR. The penalty APR is 28.99%. It applies if you: 1. make a late payment, 2. go over the credit limit, 3. make a payment that is returned or, 4. do any of the above on any other account that the cardholder has with the bank. Annual fee, Account set-up fee, Participation fee, Additional card fee, Balance transfer, cash advance fee, foreign transaction fee, late payment fee, over the limit fee, and returned payment fee. Annual fee and participation fee — total $32 You will pay a balance transfer fee. In this case it’s $45. The APR is 14.99%. You will pay a balance transfer fee. In this case it’s $45. The APR is 14.99%.

Are You Financially Literate? Chapter 12 Quiz

1. 2. 3.

D A

Students should indicate that they could choose to buy a franchise. A franchise is an independently operated business using the name and product of another business that is already successful; a franchise is modeled after the business system of the franchisor. Students should indicate that Leland is wrong, sole proprietors are personally liable for the debts of their business.

4.

Credit Card Cred

1. 2. 3.

Yes. $85.07

5. 6. 7. 8.

F

$450

D B

3.

$517 in purchases + $318 in cash advance + $785 balance transfer = $1620.12

4.

Ed can contact SCORE which is now called “Counselors to America’s Small Business”, a group of former executives from a variety of industries who help business owners solve problems; The Small Business Administration (SBA) also has helpful resources.

4. 5.

$2000

$214 in available credit; the cardholder should keep the balance below 30% of the credit limit = $600 (the credit utilization ratio) March 22; last day of the billing cycle; all charges and transactions from that period within that billing cycle. Signals the start of

5.

6. 7. 8.

36 cents

6.

$35 late fee

9.

D

You had a late payment. The penalty APR of

381 THE 21st CENTURY STUDENT’S GUIDE TO FINANCIAL LITERACY

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