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retirement planning.

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Question

Case Study 2   Your client, Steven, age 43, has come to you for assistance with

retirement planning. He provides you with the following facts.

  • He earns $80,000 annually.
  • His wage replacement ratio has been determined to be 80%.
  • He expects inflation will average 3% for his entire life expectancy.
  • He expects to work until 68, and live until 90.
  • He currently has $60,000 saved, and he is averaging a 9% rate of return and expects to continue to earn the same return over time.
  • He has been saving $3,000 annually in his 401(k) plan.
  • Additionally, Social Security Administration has notified him that his annual retirement benefit, in today’s dollars will be $26,000.

1. Using calculations, explain to Steven why it is realistic to use a wage replacement ratio of 80%.

2. Using the annuity method, calculate how much capital Steven will need to be able to retire at age 68.

3. Given his current resources, does he have sufficient resources to achieve his retirement goal? Using calculations, show and explain your answer to Steven.

4. Provide Steven with 3 alternatives for meeting his retirement goal. In doing so, use calculations to show the impact of each alternative.

Before hiring you as his financial planner, Steven was going to another planner. He mentions that the other planner calculated this retirement needs another way, so he asks you to calculate his retirement needs using other methods.

5. Using the capital preservation method, calculate how much capital Steven needs in order to retire at 68.

6. Using the purchasing power preservation method, calculate how much capital Steven needs in order to retire at 68.

7. In your own words, provide Steven with the advantages and disadvantages of each method and explain why the amounts calculated are different with the three methods.

8. In your own words, provide Steven with the advantages and disadvantages of 2 investment instruments that are used specifically to save for retirement. Which would you recommend and why?

 
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forecast of sales

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Question

 Here is a forecast of sales by National Bromide for the first 4 months of 2015 (figures in thousands of

dollars):

 Month            1          2         3         4 

Cash Sales     17        26       20       16

Credit Sales   110     130     100      80

On average, 50% of credit sales are paid for in the current month, 30% in the next month, and the remainder in the month after that. What are the expected cash collections in months 3 and 4? (Enter your answers in whole dollars.)

                         Expected cash collections

Month 3                        $ ________

 
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accountability

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Question

a two hundred word summary of any recent article based on the word “accountability” when it comes to business

leadership or management. followed by a three hundred word discussion adding to the thoughts of the article.

 
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Kinky Copies may buy a high-volume copier

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Question

Kinky Copies may buy a high-volume copier. The machine costs $20,000 and will be depreciated straight-line over 5

years to a salvage value of $3,000. Kinky anticipates that the machine actually can be sold in 5 years for $10,000. The machine will save $3,000 a year in labor costs but will require an increase in working capital, mainly paper supplies, of $1,500. The firm’s marginal tax rate is 35%, and the discount rate is 13%. (Assume the net working capital will be recovered at the end of Year 5.)

Calculate the NPV. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.)

 
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