Family Finance
2017-07-31
FaFi | Family Finance| © http://michalskig.com/
Family Finance
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E-mail: [email protected]
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www: HTTP://MICHALSKIG.UE.WROC.PL/
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Mobile: 48.503452860
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5 meetings + 1 exam (test)
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Next meeting: 11th March.
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Douglas A., E. Lewin, Family Finance, Dearborn Trade 2001.
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Millar R., A Complete Guide to Family Finance, Kogan Page Publishers 2004.
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Israelsen C. L. , R. O. Weagley, Personal & Family Finance Workbook, Kendall Hunt Pub 2006.
FaFi | Family Finance| © http://michalskig.com/
2
The aim of family financial management?
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Maximization of family wealth:
FCFn
non _ eco _ benn
V  

n
n
1  CC 
1  CC 
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First: how we calculate realization of the general aim in
nonfamily financial management?
FaFi | Family Finance| © http://michalskig.com/
3
10 steps to Value
1)
CR
6)
Capital structure
2)
Operating Cycle
7)
FCF forecasting
3)
Assets
8)
IRR
4)
AP
9)
Cost of Capital (CC)
5)
Capital invested
10)
∆V
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4
Family Finance cases:
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Create himself or buy? (home products, home food or in restaurants, who should repair a
tap, husband or plumber (tap expert), hire a maid? etc.
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Child in home or in kindergarden?
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(Homeschooling) Child in home or in school?
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Car: buy older but without the credit or a new but with credit?
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How many cars in a family?
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House or a flat? Why?
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A garden or a free time with fruits from a hipermarket?
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What kind of car? Which one?
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5
Create himself or buy?
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Two + four family (2p + 4 ch).
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One warm dish for one person costs 5 euros in town. It take 1 hour to wait in queue and finaly after
eating coming home. Eating takes 0.5 hour. For parents use work equivalent.
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Preparation of 6 dishes takes 2 hour daily and A euro / person for raw materials and energy for
preparation of meal for whole family.
A  2  (1  n), where n  m arg inal number of persons in family
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1hour of work of homekeeper: 3.5 euros per 1 hour. Its the work equivalent.
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For home food preparation we need additional equipment: cooker, dishwasher, greater fridge. It costs
400 euros initial investment and its economical lifetime is: 7 years. NWC = n * 5% of CE in case of home
food.
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Cost od debt = kd = 18%; cost of equity = ke = 4.6% * (1-Tb) (remember about BELKA TAX! Tb = Belka Tax
Rate)
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6
Create himself or buy?
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Two adults family (2a).
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One warm dish for one person costs 5 euros in town. It take 1 hour to wait in queue and finaly after
eating coming home. Eating takes 0.5 hour. For parents use work equivalent.

Preparation of 6 dishes takes 2 hour daily and A euro / person for raw materials and energy for
preparation of meal for whole family.
A  2  (1  n), where n  m arg inal number of persons in family

1hour of work of homekeeper: 3.5 euros per 1 hour. Its the work equivalent.

For home food preparation we need additional equipment: cooker, dishwasher, greater fridge. It costs
400 euros initial investment and its economical lifetime is: 7 years. NWC = n * 5% of CE in case of home
food.

Cost od debt = kd = 18%; cost of equity = ke = 4.6% * (1-Tb) (remember about BELKA TAX! Tb = Belka Tax
Rate)
FaFi | Family Finance| © http://michalskig.com/
7
Create himself or buy?
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Two + one + seven family (2p + 1g + 7 ch).

One warm dish for one person costs 5 euros in town. It take 1 hour to wait in queue and finaly after
eating coming home. Eating takes 0.5 hour. For parents use work equivalent.

Preparation of 6 dishes takes 2 hour daily and A euro / person for raw materials and energy for
preparation of meal for whole family.
A  2  (1  n), where n  m arg inal number of persons in family

1hour of work of homekeeper: 3.5 euros per 1 hour. Its the work equivalent.

For home food preparation we need additional equipment: cooker, dishwasher, greater fridge. It costs
400 euros initial investment and its economical lifetime is: 7 years. NWC = n * 5% of CE in case of home
food.

Cost od debt = kd = 18%; cost of equity = ke = 4.6% * (1-Tb) (remember about BELKA TAX! Tb = Belka Tax
Rate)
FaFi | Family Finance| © http://michalskig.com/
8
FaFi | Family Finance| © http://michalskig.com/
FaFi | Family Finance| © http://michalskig.com/
FaFi | Family Finance| © http://michalskig.com/
FaFi | Family Finance| © http://michalskig.com/
FaFi | Family Finance| © http://michalskig.com/
FaFi | Family Finance| © http://michalskig.com/
FaFi | Family Finance| © http://michalskig.com/
FaFi | Family Finance| © http://michalskig.com/
FaFi | Family Finance| © http://michalskig.com/
FaFi | Family Finance| © http://michalskig.com/