1. Capital Budgeting As a former college athlete, Mike Carpenter strongly believ
ID: 2659297 • Letter: 1
Question
1.
Capital Budgeting
As a former college athlete, Mike Carpenter strongly believes in the benefits of being healthy and physically fit. He returned to his hometown in 2000 and opened the WeightsPlus Health Club the following year to enhance the lives of the individuals and families in his community through exercise. This member-based club focuses on providing a total workout experience which includes a full line of cardio equipment (treadmills, steppers, ellipticals, rowing machines, and stationary bicycles), free weights, a twenty-five meter lap pool and three indoor basketball courts. The club also offers group and individual fitness instruction to its members through its staff of personal trainers. Although Mike experienced high start-up costs and did not expect to generate a profit for the first four years of operation, the popularity of the club grew faster than anticipated, especially with active individuals over fifty years of age, and WeightsPlus had profits of $500,000 at the end of the third year.
Slowed by the economic downturn in 2009, Mike had to postpone major updates to WeightsPlus. During this time his membership dropped by twenty-five percent. To reduce operating expenses, he cut back on the club
Explanation / Answer
Budgeting lies at the foundation of every financial plan. It doesnt matter if youre living paycheck to paycheck or earning six-figures a year, you need to know where your money is going if you want to have a handle on your finances. Unlike what you might believe, budgeting isnt all about restricting what you spend money on and cutting out all the fun in your life. Its really about understanding how much money you have, where it goes, and then planning how to best allocate those funds. Heres everything you need to help you create and maintain a budget.1. Budgeting Basics
Do you know why a budget is so important? On the surface it seems like creating a budget is just a tedious financial exercise, especially if you feel your finances are already in good order. But you might be surprised at just how valuable a budget can be. A good budget can help keep your spending on track and even uncover some hidden cash flow problems that might free up even more money to put toward your other financial goals.Related Questions
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