Financial planning case study

Assignment Requirements

 

S1 2014 FOBE302
Case Study
Keith has his own handy man business, which he runs from home, and grosses $65,000 after all business expenses. His wife, Wendy, works in media grossing $265,000 p.a. after SG. Wendy expects to receive a bonus of $23,000 next week. She intends to put it into her superannuation.
It is Keith’s second marriage and there are no children from the previous marriage.
They are paying off a mortgage of $1,550,000 on their own home which is now worth $2,050,000. The mortgage costs them $6,978 per month at a rate of 7.75% over 20 years. It is a standard principal and interest loan. They have owned the home for 2 years.
They have three children a 16 year old, 14 year old and a 11 year old. They all go to private schools at a total cost of $65,000 p.a. Payable at the beginning of each term. There 4 terms in the year.
Keith has a Self Managed Superfund with $65,000 in cash. He contributes $13,000 p.a. as concessional contributions.
Wendy has $175,000 in superannuation which is invested in a Capital Guaranteed Fund. She also salary sacrifices an additional $10,000 p.a.
They have a joint savings account with $20,000 for emergencies.
Keith has a bank deposit for $10,000 in case he needs cash for the business.
Wendy has a share portfolio, now valued at $47,500, which she inherited from her father three years ago. At the time of the inheritance the shares were valued at $42,600.
Keith owns a listed debenture with a FV of $35,000 and a coupon of 8.5% paid quarterly and with 24 months to maturity. It is currently trading at a yield of 6.75%.
There are two car loans;
Wendy’s car – 2 years into a 5 year loan at 8.5%, with $56,335 outstanding & costing $1,754 per month,
Keith’s work utility – 2 years into a 3 year loan at 8.40% with $21,442 outstanding and costing $1,901 per month. There is an early break fee of $500.
Wendy also owes $15,000 to her parents who are now having some financial difficulty due to heavy medical bills.
Their credit card has an outstanding amount of $35,965 and they make the minimum payment of 3.5%.
They are in a private health fund which costs $312 per month.
They try to keep their living expenses, around $2,500 per month, as low as possible but it is difficult with all the extra costs for sport etc for the children.
They are concerned that although they feel they should be doing better the credit card keeps getting worse each month and that schools fees are due for next term and they do not know where the money will come from.
Wendy’s younger step brother (18) lives with them but does not contribute to the household expenses. He is an apprentice earning $17,500 per annum.
Keith’s father is quite ill and it is expected he will be incapacitated and hospitalized within the next 12 months. His mother has asked Keith to be executor of their wills. Both Keith and Wendy have wills executed prior to their marriage.

Requirement
Case Study

The case study is due by 11.00 pm Friday 13th June.

The word limit is 2,000 (+/- 15%) anything beyond the 2,300 words will be ignored.

Students are required to use the material in Modules1, 2 & 3 to:

identify the problem the couple have now and/or will have in the near future.
identify the necessary steps the couple need to take to improve and better their situation.
explain why those steps are needed
illustrate the expected outcomes from taking those steps.
You will need to do a number of calculations but only include the answers not the calculations.

DO NOT include any charts, graphs or tables you will be marked down if you do.

Everything in the case study is there for a reason plus somethings are not mentioned but should be referred to. .

Students in previous semesters have failed the Case Study because they spent more than a quarter of the word count telling me what is in the Case Study. I know what is in it, I wrote it.

In order to pass this subject students must pass the case study which enables them to demonstrate their accumulated and integrated understanding of the unit material. If performance in the case study does not demonstrate this level of achievement, a passing grade overall can be achieved by higher performance in the quizzes and the assignments.

No extension will be granted. Students who have not submitted the case study prior to the deadline will be awarded a mark of 0, except for cases in which an application for special consideration is made and approved.

(ps. there may be more requirements, tutor will post on the school ilearn, so please contact with me)

S1 2014 FOBE302

Case Study

Keith has his own handy man business, which he runs from home, and grosses $65,000 after all business expenses. His wife, Wendy, works in media grossing $265,000 p.a. after SG. Wendy expects to receive a bonus of $23,000 next week. She intends to put it into her superannuation.

It is Keith’s second marriage and there are no children from the previous marriage.

They are paying off a mortgage of $1,550,000 on their own home which is now worth $2,050,000. The mortgage costs them $6,978 per month at a rate of 7.75% over 20 years. It is a standard principal and interest loan. They have owned the home for 2 years.

They have three children a 16 year old, 14 year old and a 11 year old. They all go to private schools at a total cost of $65,000 p.a. Payable at the beginning of each term. There 4 terms in the year.

Keith has a Self Managed Superfund with $65,000 in cash. He contributes $13,000 p.a. as concessional contributions.

Wendy has $175,000 in superannuation which is invested in a Capital Guaranteed Fund. She also salary sacrifices an additional $10,000 p.a.

They have a joint savings account with $20,000 for emergencies.

Keith has a bank deposit for $10,000 in case he needs cash for the business.

Wendy has a share portfolio, now valued at $47,500, which she inherited from her father three years ago. At the time of the inheritance the shares were valued at $42,600.

Keith owns a listed debenture with a FV of $35,000 and a coupon of 8.5% paid quarterly and with 24 months to maturity. It is currently trading at a yield of 6.75%.

There are two car loans;

• Wendy’s car – 2 years into a 5 year loan at 8.5%, with $56,335 outstanding & costing $1,754 per month,
• Keith’s work utility – 2 years into a 3 year loan at 8.40% with $21,442 outstanding and costing $1,901 per month. There is an early break fee of $500.

Wendy also owes $15,000 to her parents who are now having some financial difficulty due to heavy medical bills.

Their credit card has an outstanding amount of $35,965 and they make the minimum payment of 3.5%.

They are in a private health fund which costs $312 per month.

They try to keep their living expenses, around $2,500 per month, as low as possible but it is difficult with all the extra costs for sport etc for the children.

They are concerned that although they feel they should be doing better the credit card keeps getting worse each month and that schools fees are due for next term and they do not know where the money will come from.

Wendy’s younger step brother (18) lives with them but does not contribute to the household expenses. He is an apprentice earning $17,500 per annum.

Keith’s father is quite ill and it is expected he will be incapacitated and hospitalized within the next 12 months. His mother has asked Keith to be executor of their wills. Both Keith and Wendy have wills executed prior to their marriage.

 

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