The Lee Case Study Questions
PART ONE--FOUNDATIONS ECONOMIC PLANNING
Megan and Kevin Lee--The Bride and groom
Megan and Kevin Shelter would like the help in starting their economic plan. Assessment Megan and Kevin's monetary and personal data before giving an answer to the following inquiries.
1 . Making use of the January one particular, 2002 advantage and legal responsibility information, produce a balance sheet to get Megan and Kevin Lee. Assume they may have no delinquent bills. Precisely what is the Lee's net worth?
2 . Using the profits and expenses information intended for 2001, full an income and expenses statement for Megan and Kevin. Use the " cash flow" concept with this financial affirmation including almost all money inflows as profits and all outflows as costs. Did Megan and Kevin have a cash excess or a cash deficit in 2001? What impact will the 2001 cash surplus (deficit) have within the following year=s (January 1, 2002) "balance sheet"?
3. Based upon Megan and Kevin's monetary statements, determine the following percentages: 1 . Cost savings ratio
installment payments on your Liquidity proportion
3. Solvency ratio
four. Debt services ratio
4. Based on the information in the unique case, via Megan and Kevin's monetary statements, and from the percentages, list for least several positive and 3 unfavorable aspects of the Lee=s current financial position.
Following reading Chapters 1 and 2, it is likely you realize that Megan and Kevin's financial desired goals are not identified well enough in the original case to serve as the basis for financial program and money budget. After further review, Megan and Kevin have got restated all their financial goals in order of priority the following: 5. Repay all existing credit card amounts within the next a couple of years. 6. Possess liquid assets corresponding to 3 month's net income within the next 2 years for an unexpected emergency fund. 7. Save $10,50, 000 pertaining to the acquiring a second car in three years. 8. Acquire a house within just 5 years. Megan and Kevin consider using the handed down funds that are currently used the Faithfulness Magellan mutual fund for this goal. being unfaithful. Save $6, 000 for a down payment over a new car to replace the Explorer within just 5 years. 10. Increase contributions to Kevin=s 401(k) plan by 5% to 8% of his low salary. eleven. Have enough accumulated in an accounts to provide Kevin=s father $12, 000 12 months during his retirement years. They expect Lyle can retire in 20 years at age 70 and may live 12-15 years following retirement. Kevin and Megan would like to have all the money accrued by the time Lyle retires. doze. Establish a frequent savings/investment software to accomplish these kinds of goals.
a few. Using time value measurements, how much could Megan and Kevin have to save this year to be to normal in meeting their desired goals for: 13. their unexpected emergency fund (Remember Megan and Kevin currently have some funds in their market bourse account, market bourse mutual account, and savings. They do not desire to consider the money inside their checking accounts or cash on hand for this goal. ) 14. the 2nd car
12-15. the deposit for a new car to switch the Explorer 16. the fund to get Kevin=s father=s retirement years
Assume Megan and Kevin can earn 2% after inflation and taxation on their crisis fund and 4% following inflation and taxes on the car goals. In foreseeing the personal savings required for Kevin=s father=s retirement, Megan and Kevin imagine they could earn 7% after income taxes and pumpiing on the money once his daddy retires. Whilst they are amassing the money, they will feel they can take more risk and earn 9% after income taxes and inflation.
6. Make a cash plan for the year of 2002 using the income and expenditure data from the original case and also the figures required to meet Megan and Kevin=s goals (from question 5). In addition to the cash needed by question your five, they would have to make monthly credit card obligations totaling about $633 to be able to pay off their very own current credit debt within the next installment payments on your..