Question;Assignment 1;Assignment 1 is due after Lesson 5;and is worth 10% of your final mark. The plan should be approximately 8 to 10;pages in length, including a balance sheet and an income statement. The exact;length is less important than thorough, but succinct, coverage of the topic.;In Assignment 1, you will integrate;the concepts and calculations from the course with your own financial planning.;The assignment has two parts. Read;through all of Assignment 1 before you begin. Review the Assignment 1 Tips at;the end of the assignment instructions.;Be sure to show all of your math or;calculator keying sequences to support your calculations. This will help your;marker provide valuable feedback to you for examination preparation.;In Part A, you will construct;a timeline outlining the goals you wish to accomplish between now and the end;of your life, the cost of those goals, and the savings needed to achieve them.;In Part B, you will outline;tax-planning strategies you will use to maximize your after-tax income to;better facilitate accomplishing the plan you outline in Part A.;Part A;Financial Planning Timeline (3 steps);Step;1?Draw the Timeline;Draw your own financial planning;timeline. On the timeline, show the years between now and the year of your estimated;death. (Mortality tables and family history may help you estimate your;lifespan.) On the timeline, in the proper year, plot significant financial;events and goals. Consider the major events that might occur in your life. At a;minimum, include the four goals outlined in Step 2 below.;A sample timeline (see the PDF on;Assignment page) is provided as a reference. Note that the sample timeline does;not show dollar amounts and that major events in the sample are highlighted;with superscripts.;As with the sample, your timeline;will not include dollar amounts. Use superscripts to indicate which events and;goals are supported by notes and calculations (the financial planning details;you develop in Step 2).;Step 2?Goals in Detail;Provide details for each goal on;your timeline. Refer to each goal by the number you used as a superscript in;your timeline. In your discussion;describe each goal very brieflyestimate its cost and explain;how you arrived at the amount. Be sure to research and reference your;sources, for example, for housing research, indicate the inflation;applicable to your area, or for education, estimate the inflation rates;specific to post-secondary education. Provide a breakdown of such costs as;travel expenses for a vacation goal.state how you have dealt with;inflationoutline any assumptions you;made.You will have to consider the;lifestyle expectations you have for your working life and your retirement. You;may find your parents, siblings, grandparents, and spouse helpful in thinking;through your goals and in quantifying them.;Be sure to include the four goals;listed below, additional goals will be the result of your unique preferences.;We recognize that you may not have all the goals below in your personal life.;However, all four goals should be included in this assignment, even if they are;hypothetical. The objectives of this assignment are for you to learn the steps;required in setting and planning for each of these types of goals and to make;the plan as applicable to your personal life as possible. The overriding;benefit of this assignment is learning the processes and time value of money;math for these types of goals. This should help substantially with examination;preparation.;Education;What will a university education cost when your children are ready to;attend? Be sure to consider tuition as well as living costs. Check on;current costs and think about how these might change, and reference all;sources you use. Remember that tuition costs might increase at a greater;rate than general consumer prices. How much will you have to save in order;to have enough money when each child starts university to fund that;child?s entire education? If your children are already past university;age, set these goals for grandchildren or other children you deem needy;and worthy.Retirement;Follow the process outlined in Figure 16.3 on page 470 of the textbook.;You will have completed chapter 3 (Understanding the Time Value of Money);at this point in the course, and the math included in Figure 16.3 should;be understandable. The figure will assist you with the process (math;steps) appropriate for this goal.;At what age do you wish to retire? To what age can you reasonably expect;to live? How much retirement income will you need in order to support the;lifestyle you desire? Assume you will have to pay your own way in;retirement and you will not rely on government-sponsored programs such as;Old Age Security and Canada Pension Plan, or employer pension plans;therefore, you would skip this step as shown in Figure 16.3. Remember that;your retirement income requirements will be driven by your consumption;patterns. Be sure to consider the costs of retirement activities such as;travel. How much will you need at the time of retirement to fund your;retirement years?Housing;How will housing costs change over your life? Research the cost of housing;and trends in the area where you might like to live and retire. For;example, you may want to live your working life in Regina and then retire;in Kelowna. The housing prices are different in these two places.;Assume you will get a mortgage for 75% of the appraised value of the;house. (If you wish, you may use 80%, the current percentage allowed by;most financial institutions.) The other 25% (you may use 20%) will come;from the down payment that you will save. You will need to calculate;mortgage payments. Be sure to show your math calculations (see chapter 3;for the three-step process) or your calculator keying sequence.Major Trip;Plan a major trip with your spouse after your last child has finished;university. Determine how much the trip will cost. Be explicit about the;destination, today?s cost, and the likely cost when you plan to take the;trip. Credit all sources you use as references. Provide a reasonably thorough;breakdown of the trip costs rather than assessing an approximate single;lump sum amount.;Step 3?Calculate Savings Required;Calculate how much you must save;per year, during your working career in order to achieve your objectives.;Assume that your ability to accomplish goals will come from your yearly savings;and not from any inheritances or investments.;After you have determined the yearly;savings required, estimate how much you must earn, before tax, to have this;amount of savings available each year. Is the income requirement realistic;given your goals? If not, your goals must be modified or changes made to your;?income available for savings? line on your income statement such that the;goals are attainable.;Part B;Tax-Planning Strategies;List five major tax-planning;strategies you will use to maximize your after-tax income and facilitate;achieving your goals, as outlined in Part A. Be sure to state why you have;selected these five strategies as the most important. Each strategy should be distinctly;different. Features, strengths, and weaknesses of each strategy should be;outlined and made specific to your individual plan. Each strategy should be at;least one quality paragraph in length.;How Will;Assignment 1 Be Evaluated?;Part A is 75% of Assignment 1. Your;mark for Part A will be based on the following;Is your timeline comprehensive?;The four generic goals stated in Step 2 are the minimum?you will have;other goals.How much research did you;undertake to ascertain realistic costs? Be sure to provide references for;your research sources.Are your calculations accurate;and complete? Be sure you deal in actual dollar amounts that reflect the;effects of inflation.Part B is 25% of Assignment 1. Your;mark for Part B will be based on how well you explain the strategies you choose;and justify why they are important.;Assignment;1 Tips;Part A;In Step 2, Goals in Detail, and Step 3, Calculate Savings Required, be sure you;support the calculations for all goals within the financial plan. Proper time;value of money (TVM) math or financial calculator keying sequences must be;shown.;See Chapter 3 of the textbook and the corresponding lesson notes to ensure;you have done the TVM calculations properly throughout the plan. It is;essential that you understand and be able to perform proper TVM calculations;these skills are necessary for completing Assignment 1 and for preparing for;examinations.;For the retirement plan (Step 2, Goals in Detail) you will find it helpful to;follow the process outlined in Figure 16.3 (p. 470 of the textbook). As you use;this process for Assignment 1, ignore the CPP and OAS information.;In Step 3 ? Calculate Savings;Required, you are asked to identify the average savings rates for a Canadian;earning $50,000, $100,000, etc. per year. These statistics are no longer;readily available.;In lieu of determining the savings rates at various income levels, you should;determine the total annual savings amount needed (as calculated using time;value of money math) to achieve all your personal goals within the assignment.;Then, compare your personal required savings rate (annual savings amount needed;divided by after-tax income available for living expenses) with the average;Canadian's savings rate in general. Discuss whether the personal required;savings rate is reasonable when compared to the average Canadian's savings;rate. If it is not, a reasonable explanation should be provided as to how goals;will be achieved, otherwise, the goals may need to be modified.;You may find the following link to Statistics Canada helpful:http://www40.statcan.ca/l01/cst01/indi02a.htm Part B;Be sure you devote sufficient time;and energy to your tax-planning strategies. Remember, Part B is worth 25% of;Assignment 1. At a minimum, this part of your assignment should include clear;well-written paragraphs (one paragraph per strategy) outlining why the strategy;would be advantageous (and limitations of the strategy, if applicable) as well;as comments on how the strategy applies specifically to your plan.
Paper#49502 | Written in 18-Jul-2015Price : $52