$1.$ Develop a Cash Flow Management Plan

You can do yours or make someone up$.$ The model must have the following:

$$ Annual Projections $($Need at least five different income sources $$rows$$ and five different spending uses $$rows$)$ tab $$ need at least $20$ years,

$$ Spending Budget $($Need to Separate $$Needs$$ and $$Wants$)$ tab $-$ Needs to be monthly amounts that apply for each year, and

$$ Vacation & Big Ticket $($Wishes$)$ Items $-$ Need $10$ years

You can leave the following tabs blank $($we$$ll do those in class at a later point$)$:

$$ Net Worth,

$$ Cash Run$-$rate,

$$ Retirement Assets, and

$$ Retirement Timeline$3.$ Debt Management Case Study

$$I felt an infinite force inside me$.$ I knew instinctively that I wasn$$t going to fall. I skated better than I$$d ever skated before.$$

At the same time that the viewership of ABC$$s Wide World of Sports on television was peaking, Dorthy Hammill$$s ice skating career was hitting its apex. She had just come off her $1976$ Gold Medal Olympic Ice Skating Performance. At the age of $19,$ she won the hearts and minds of families across the U$.$S$.$ for her smile and her signature move, the Hamill Camel during the Olympics.

For all of $1977,$ Dorthy graced Wheaties boxes, girls asked for the Dorthy wedge haircut, she talked about her success with Johnny Carson, and she started hanging out with Dean Martin, Jr$.,$ the son of Dean Martin $($one of Frank Sinatra$$s rat pack buddies$).$ Dorthy was the Ice Queen.

At the beginning of $1978,$ Dorthy had earnings to date of $$12,000,000.$ Before investing her earnings at the beginning of $1978,$ Dorthy withdrew $$2,000,000$ to purchase a home $($all$-$cash$)$ in Connecticut. Her investment advisor invested her earnings conservatively in cash that was earning $5\%$ each year starting in $1978.$ All of this investment was in a non$-$retirement brokerage account. Dorthy also was the star of Ice Capades, a traveling entertainment show featuring theatrical ice$-$skating performances throughout the world. This and related media earned her a flat $$100,000$ each year starting in $1978.$

Dorthy was also spending a lot of time in California to keep up her social lifestyle. She purchased a second home there for $$2,000,000.$ She put no money down, her interest rate was $7\%$ annually, and was a $30-$year traditional mortgage loan. She viewed all of her spending as Non$-$Discretionary Spending and this amount totaled $$400,000$ in $1978.$

Life for Dorthy in the late $1970$s and early $1980$s was bliss. Little did she know, but the ice was melting underneath her. Inflation was ramping up and averaged $8\%$ annually from $1978$ to $1984$ and was directly impacting Dorthy$$s exquisite lifestyle. Things got more serious between her and Dean Martin as they wed in $1982,$ but it was never to be long$-$lasting.

Dorthy and Dean divorced at the end of $1984$ and Dorthy$$s net worth was instantly down $50\%$ because of it$.$ Her financial advisor told Dorthy to adjust her lifestyle spending, and she did...she adjusted her spending to $$200,000$ in $1986.$ Luckily for her, inflation was normalizing to an annual rate of $4\%.$

With the Dean Martin divorce behind her, Dorthy focused her energy solely into Ice Capades; unfortunately, her competition $($Disney on Ice and the Ice Follies$)$ was doing triple axels to command attention. The intense rivalry between shows forced Ice Capades to shut down at the beginning of $1991$ and Dorthy had to take a $50\%$ loss in income by coaching local beginner ice skaters how to glide across the ice. Throughout the $1980$s and $1990$s$,$ Dorthy had utilized home equity to fund vacations and other excursions that left her with no equity remaining in $1993.$

Fed up with the monotony of hot chocolates and tying skates for four$-$year olds, Dorthy and her second husband planned a revival of Ice Capades in $1992.$ At the beginning of $1993,$ Dorthy invested $$6,000,000$ into Ice Capades. Half of the $$6,000,000$ investment was a $10\%$ simple interest due at the end of each year with a personal guarantee. The other $$3,000,000$ was equity from her account.

After running Ice Capades for only two years, Hamill was forced to liquidate and shut down the show in $1995.$ She officially fell flat on the ice in $1996$ as she filed for bankruptcy.

Rhetorial question: What made her financial life go so wrong?

Make sure your model can answer the questions:

$1.$ What were Dorthy$$s Debt Payment to Income Ratio and Long$-$Term Debt Coverage Ratio in $1978$ and $1985?$ What is your concern with these values?

$2.$ What were two main issues with Dorthy$$s earnings and her Non$-$Discretionary Spending?

$3.$ What would have been two key financial advising recommendations that you would have for Dorthy throughout her life and why?

$4.$ What type of bankruptcy did Dorthy likely do in $1996?$