Question for Winston & Yvonne

PERSONAL WEALTH MANAGEMENT ASSIGNMENT: SEMESTER 1 2013 DUE DATE: Week 9 (at lecture) TOPICS COVERED: 1-7 ASSIGNMENT IS WORTH 20 MARKS (Marked out of 100 and scaled to 20) ASSIGNMENT REQUIREMENTS You have been provided with a Client Data Form for Winston and Yvonne Kee. Winston and Yvonne have come to you for financial planning advice and have completed their personal financial details and provided information about their needs and objectives. You are to use the information in the Client Data Form to answer the assignment questions. This is a group assignment and you will be required to form a group in the first two classes. A group is 4 students. Each member of the group is to participate fully in the assignment and the group is required to submit a signed statement attesting to full participation and contribution by group members. Where the group believes a member has not contributed sufficiently to the work submitted, this should be documented. In this event, the member may receive a lower mark for the assignment than the other group members. Your assignment should be typed and securely bound. Start each question on a new page. Show your workings.

ASSUMPTIONS You should use the following assumptions in your calculations. If you need to make other assumptions please state them. Inflation 2%, investment earnings 4%, investment growth 4%, cash interest rate is 1.5%, interest rates on mortgage borrowings 3%.

BAFI 1016

1 Personal Wealth Management

SEMESTER 1 2013

Question 1 Calculate the following ratios for Winston and Yvonne • • • • Net worth ratio Liquidity ratio Savings ratio Debt service ratio

Describe what stage in the life cycle Winston and Yvonne are in. Based on the ratios you have calculated, summarise and analyse Winston and Yvonne’s current financial situation commenting on whether their situation is as you would expect for a couple in that stage of the lifecycle. 10 Marks Question 2 Calculate the amount Winston and Yvonne would need to