Resources

Can I Afford More Assets? (Part I)

Choose roles and act out the following:

MARIA: Naomi, I decided to buy more chickens. I need more productive assets to grow my business.

NAOMI: That sounds like a good decision to me. So can you afford the chickens?

MARIA: Afford? Yes, I’m getting a loan for the chickens.

NAOMI: How much are you thinking of borrowing?

MARIA: The loan would be 1500.

NAOMI: Why 1500?

MARIA: Well, I know someone who is selling 15 chickens for 1500. It is a good price.

NAOMI: Why 15 chickens?

MARIA: That’s just how many he has.

NAOMI: Do you have enough cash flow for 15 chickens?

MARIA: Yes … well … um, I guess. I don’t know.

NAOMI: What are the monthly payments?

MARIA: I talked to one lender, and he said it would be 275 per month.

NAOMI: Do you have enough available cash each month to make the payments?

MARIA: I hope so.

NAOMI: Maria, you can’t just hope. You need to know that you will have enough available cash to make payments.

MARIA: But, how would I know?

Back to page 108

Can I Afford More Assets? (Part II)

Choose roles and act out the following.

MARIA: Naomi, thank you for showing me how to find out how much cash I have available. Loan payments of 275 per month would have been very bad for me. I would have run out of money in the third month. I would not have been able to make payments. I could have lost my business!

NAOMI: Oh, Maria, I’m so glad we looked at your available cash before you got a loan.

MARIA: Me too. But how would I know how much I could afford?

NAOMI: Well, let’s try it again with a smaller loan.

MARIA: Ok. I’ll try looking at a loan with payments of 150 to see if I can afford it.

Back to page 113