Posted: December 8th, 2014

Financial Case Study

Financial Case Study

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.

2. Please read all materials I gave before you start.

3. The Question is attached as Question.doc

4. There are sample(Answer) and answer guide from Last Semester which can be very helpful. Please read it as well and follow how they did it last semester.

5. The only different is the question so the last semester pack is very useful to follow.

6. There is no reference needed for this case study

7. There are some calculations needed for the case study but only the results. Therefore the skills is needed for this case study.

8. This case study is 60% of my whole Unit which is equals to my final exam. So please make it a CR above grade as possible as you can.

Case Study

FOBE302 Semester 2 2013

We have a couple, Ann and Jack who are both in their mid forties. She earns $260,000 gross, after SG, as a marketing executive for an insurance company. He operates his own IT business where he visits peoples’ homes and solves their IT problems. He earns $85,000 gross after deducting the expenses for the business.

Their home, which they purchased last year, is valued at $1,250,000 and they have a standard principal and interest mortgage of $1,050,000 costing them $6,699 per month. The mortgage does not have a re-draw facility.

Jack has an investment unit which he bought using an interest only loan of $465,000 at 5.25% pa interest. He paid $460,000 for the unit 5 years ago and Jack believes the unit is now worth $550,000. The tenant pays $475 per week through an agent. The agent has told Jack that the owner of the unit next to his wishes to purchase Jack’s unit for $540,000.

Ann has a substantial share portfolio which she inherited from her father.
When she inherited the shares they were valued at $235,600 and are now worth $240,750. The shares have a yield of 4.5% pa and are fully franked. She has owned the shares for three years.

They have four children of school age. Two, the 16 year old and 13 year old, go to a private high school with total fees of $34,000 p.a. The fees are paid quarterly and are due within the next two weeks. The two younger ones, the 11 year old and 7 year old, go to the local primary school. Next year the 11 year old will be going to the private high school.

They are considering investing in a company that a family friend has suggested to them. The company has a process that will lower the fuel consumption of motor vehicles by 80%. They need to make a decision quickly as the friend has told them that if they do not invest quickly they will miss the opportunity. The minimum investment is $50,000.

Jack has a Self Managed Superannuation Fund with $66,000 in cash and he contributes $7,860 p.a. as a concessional contribution.

Ann’s superannuation has $167,000 in a Capital Guaranteed Fund and she salary sacrifices $4,000 p.a. She has a further $10,500 in an industry fund from previous employment. It is invested in a balanced fund. Ann will receive a bonus of $25,000 next month and she intends to put it straight into superannuation to save the tax.

They have a savings account with $10,000 for emergencies. Interest rate is 2.5% p.a.

He has a deposit for $15,000 in case he needs cash for the business. Interest rate is 2.5% p.a.

There are three personal loans;
•    Her car, with a payout figure of $35,500 and the vehicle is worth $32,500. It has 3 years to run and a monthly payment of $1,120per month.
•    His car, with a payout figure of $20,110 and the vehicle is worth $21,000. It has 2 years to run and a monthly figure $920 per month.
•    The home theatre system and a holiday, with a payout figure 0f $16,600. It has 2 ½ years to run and a monthly figure of $700 per month.

Their credit card has an outstanding amount of $28,500 and they make the minimum payment of 3.5%.

Ann’s much younger step-sister is living with them, but does not contribute to the household expenses. She is an apprentice hairdresser and earns $16,500 per year.

Jack’s mother passed away recently and his father is very ill and is expected to be mentally and physically incapacitated in about 6 months time.

Jack and Ann do not have private health cover.

The household expenses are $4,600 per month.

They feel that they should be doing better financially but the credit card keeps increasing every month.

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