976 price

[James Carlson]

Steve Gordon writes:
> There seems to be one hole.  If a member leaves and is entitled to some
> refund, where would the refund money come from?

It'd have to come out of the equity we have in the plane.  The ways to
do that would include finding a new member (there should probably be
net 60 terms on that cash-out, so we have a chance to do that),
borrowing against the value of the plane (if that's possible), asking
the remaining members for a special assessment to adjust the balance
(just recompute with the smaller membership numbers; the arithmetic
will work out), and, in the extreme, selling the plane and shutting
down the club.

As an example of how to that "special assessment" (the third option on
the list; should exhaust the first two before getting there), let's
say we started with 10 members at $3300 each (total $33,000), we
assume 180 months to pay, and one leaves after 6 months.

The one member leaving needs $3300*174/180 = $3190.

If we simply assume that the 10th member (who is now leaving) never
joined in the first place, the remaining 9 members would have
initially paid $3666.67 each.  Their current balance (174/180) would
be $3544.44, but it is actually $3190, just like the one member who is
leaving.  This means that each of the 9 must pay in $354.44 to adjust
his balance back to where it should be at this moment in time.

That 9 * $354.44 is the $3190 that goes out to the leaving member.
(I'll personally guarantee the $0.04 rounding error.  ;-})

>  Over time the club may
> build savings, but if a member leaves too soon the club would have
> insufficient funds to pay back the member.  If more than one member decides
> to leave, that would only exacerbate the cash flow problem.  Such an event
> may leave us with little choice but to make a special one-time assessment to
> cover the loss of membership.  I would not want to be surprised with a $500
> - $1,000 fee accompanied by an increase in monthly dues.

The by-laws should probably have a minimum membership, so there's a
maximum amount out of pocket before we end up either dissolving or
finding some other way to finance our flight habit.

-- 
James Carlson         42.703N 71.076W         <carlsonj at workingcode.com>