Jason and Sara have come to you for advice. Using the information, you have collected (see...
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Jason and Sara have come to you for advice. Using the information, you have collected (see case) complete the following: 1. Write an engagement letter to Anna and John (use exhibit 1.2 as a guide). Be sure to discuss your engagement objective, activities, and fees. (25pts) 2. Based on your assessment of Jason and Sara, what stage of the Life Cycle would place them and why? (10pts) Case Study FINC 315 Jason and Sara Brown Jason (age 35) and Sara (age 38) Brown are married and live in Rock Hill, SC. They have a daughter, Debbie Brown (age 8). Sara is a nurse, and Jason teaches at Winthrop University. Debbie attends a private elementary school in Fort Mill, SC, that costs $14,000 per year and is payable in ten installments. Jason and Sara have a pool in their backyard and just purchased a trampoline for Debbie. Sara also has a Shih Tzu dog that is three years old. Sara has $6,000 in cash hidden under their mattress in the event an emergency arises. Both Jason and Sara consider themselves risk-averse and skeptical of the stock market. Jason and Sara purchased their primary residence one year ago for $250,000. They closed on their home in November 2019. Their down payment was $12,500, and the remainder was a mortgage. The interest on the mortgage is 6%, and the term is 30 years. Their monthly principal and interest payment towards their mortgage is $1,423.93. They currently have a mortgage with QRC Bank, which is owned and operated by a close family friend. $260,000. Both Jason and Sara have a good credit history, and their scores are slightly below 800. • Jason and Sara have asked you, their financial planner, to put together a financial plan. They have highlighted the following areas: • Both Jason and Sara would like you to help them with cash management and budgeting They have set aside $15,000 in a CD account at Founders Credit Union for Debbie's college, and they would like to ensure that it is the right decision. Sara would like Debbie to attend Duke and pay all her tuition and fees. However, she is also open to other suggestions. • Both Jason and Sara would like some help with their investment account. They are not sure if they are taking sufficient risk. • Sara has been driving the same car for twelve years, and she would like you to help her determine how much she can afford. Income Information: Jason earns $80,000 per year as a lecturer. He has been an employee at Winthrop for seven years. Sara carns $70,000 per year working a nurse in a private clinic. She has been in this position for two years. Jason is a participant in Winthrop's Defined Contribution retirement plan that is managed by TIAA Sara has access 401(k) account through her employer that is managed by Vanguard. He employer matches 50% of all contribution up to 6%. Sara has been reluctant to contribute to the account because she enjoys being able to spend her money right now. Sara has a consolidated Federal Student that is now being serviced by Navient. Her interest is interest rate is 4.83%, and she is making standard payments. Monthly Cash Flow Credit Cards Private school Groceries Electric Bill Entertainment Retirement Savings Cell Phones (2 lines) Cable Auto Insurance (2 cars) Taxes (payroll and income) Miscellaneous Homeowners Insurance Property Tax Mortgage Insurance Student Loan Balance Sheet Assets: Primary Residence FMV Auto 1 (Jason-2012 Honda Accord) Auto 2 (Sara 2005-GMC Truck) Jewelry Gun Collection Triathlon Bikes Furniture 401(k) -Jason at Winthrop Investments - Inheritance Total Assets Liabilities: Primary Mortgage Student Loan Credit Cards Total Liabilities $750.00 $1,400.00 $840.00 $170.00 $600.00 $600.00 $180.00 $95.00 $200.00 $4,000.00 $500.00 $100.00 $300.00 $120.00 $630.00 $250,000.00 $8,000 $4,500.00 $18,450.00 $3,500.00 $5,500.00 $45,000.00 $79,000.00 $25,000.00 $438,950.00 $235,329.00 $59,844.00 $6,000,00 $ 301,173.00 Jason and Sara have come to you for advice. Using the information, you have collected (see case) complete the following: 1. Write an engagement letter to Anna and John (use exhibit 1.2 as a guide). Be sure to discuss your engagement objective, activities, and fees. (25pts) 2. Based on your assessment of Jason and Sara, what stage of the Life Cycle would place them and why? (10pts) Case Study FINC 315 Jason and Sara Brown Jason (age 35) and Sara (age 38) Brown are married and live in Rock Hill, SC. They have a daughter, Debbie Brown (age 8). Sara is a nurse, and Jason teaches at Winthrop University. Debbie attends a private elementary school in Fort Mill, SC, that costs $14,000 per year and is payable in ten installments. Jason and Sara have a pool in their backyard and just purchased a trampoline for Debbie. Sara also has a Shih Tzu dog that is three years old. Sara has $6,000 in cash hidden under their mattress in the event an emergency arises. Both Jason and Sara consider themselves risk-averse and skeptical of the stock market. Jason and Sara purchased their primary residence one year ago for $250,000. They closed on their home in November 2019. Their down payment was $12,500, and the remainder was a mortgage. The interest on the mortgage is 6%, and the term is 30 years. Their monthly principal and interest payment towards their mortgage is $1,423.93. They currently have a mortgage with QRC Bank, which is owned and operated by a close family friend. $260,000. Both Jason and Sara have a good credit history, and their scores are slightly below 800. • Jason and Sara have asked you, their financial planner, to put together a financial plan. They have highlighted the following areas: • Both Jason and Sara would like you to help them with cash management and budgeting They have set aside $15,000 in a CD account at Founders Credit Union for Debbie's college, and they would like to ensure that it is the right decision. Sara would like Debbie to attend Duke and pay all her tuition and fees. However, she is also open to other suggestions. • Both Jason and Sara would like some help with their investment account. They are not sure if they are taking sufficient risk. • Sara has been driving the same car for twelve years, and she would like you to help her determine how much she can afford. Income Information: Jason earns $80,000 per year as a lecturer. He has been an employee at Winthrop for seven years. Sara carns $70,000 per year working a nurse in a private clinic. She has been in this position for two years. Jason is a participant in Winthrop's Defined Contribution retirement plan that is managed by TIAA Sara has access 401(k) account through her employer that is managed by Vanguard. He employer matches 50% of all contribution up to 6%. Sara has been reluctant to contribute to the account because she enjoys being able to spend her money right now. Sara has a consolidated Federal Student that is now being serviced by Navient. Her interest is interest rate is 4.83%, and she is making standard payments. Monthly Cash Flow Credit Cards Private school Groceries Electric Bill Entertainment Retirement Savings Cell Phones (2 lines) Cable Auto Insurance (2 cars) Taxes (payroll and income) Miscellaneous Homeowners Insurance Property Tax Mortgage Insurance Student Loan Balance Sheet Assets: Primary Residence FMV Auto 1 (Jason-2012 Honda Accord) Auto 2 (Sara 2005-GMC Truck) Jewelry Gun Collection Triathlon Bikes Furniture 401(k) -Jason at Winthrop Investments - Inheritance Total Assets Liabilities: Primary Mortgage Student Loan Credit Cards Total Liabilities $750.00 $1,400.00 $840.00 $170.00 $600.00 $600.00 $180.00 $95.00 $200.00 $4,000.00 $500.00 $100.00 $300.00 $120.00 $630.00 $250,000.00 $8,000 $4,500.00 $18,450.00 $3,500.00 $5,500.00 $45,000.00 $79,000.00 $25,000.00 $438,950.00 $235,329.00 $59,844.00 $6,000,00 $ 301,173.00
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