Jackson Yin and Angeline Yin are a loving couple married happily for more than five years....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Jackson Yin and Angeline Yin are a loving couple married happily for more than five years. They have one child, Denise Yin, aged 3. Jackson works as a Business Services Manager at a private hospital, while Angeline is an English teacher at an international school in Penang. Jackson's gross salary is RM120,000 per annum or net RM89,289 (after tax and EPF deductions), and Angeline's gross salary is RM65,000 or net RM56,685 (after tax and EPF deductions). Jackson and Angeline were schoolmates and college mates. Being the same age, 35 years old, and from the same educational background, they share similar interests and hobbies. Both of them like shopping and travelling. Once every half-year, they will travel overseas or locally for a holiday. They also love eating out at fancy restaurants. They live in an apartment which they bought five years ago at RM500,000. They paid a down payment of RM50,000 and obtained a housing loan for 35 years. The monthly loan repayment is RM 2,060.52 at an interest rate of 4.25% per annum. Both own a car each, purchased with car loans from local banks at the interest rate of 4% per annum flat. Total car loans taken are RM 162,000 to be repaid over nine years. The monthly car instalment repayment is RM2,040. They usually use credit cards for shopping and keep their balances high, more than RM 20,000 at all times and repay only 10% of the outstanding amount every end of the month. The following is their yearly statement of income and expenses: Income Jackson's salary (after tax and EPF) Angeline's salary (after tax and EPF) Interest (2% on savings account) Interest (4% on fixed deposits) TOTAL RM89,289 RM56,685 RM240 RM4,800 Home upkeep Cars instalments Cars maintenance Life insurance Eating out Credit card Groceries Travelling Utilities Housing loan repayments Miscellaneous Expenses RM151,014 TOTAL Surplus RM2.350 RM24,480 RM4,800 RM3,000 RM12,000 RM21,600 RM9,600 RM22.000 RM4,850 RM24,726 RM21,600 EMI51.000 RM8 The following is the balance sheet of the couple: Jackson Item 1. Liquid assets Cash balance Cash deposits Stocks Tax balance - LHDN Life insurance (cash values) 2. Non-Liquid assets EPF Apartment Collectibles Cars TOTAL ASSETS 3. Liabilities Mortgages Car loans Credit card balances a) TOTAL LIABILITIES NET WORTH 6,000 80,000 6,500 0 1.200 180,000 650,000 3,000 65.000 991,700 418,856 73,440 18,000 Angeline 510,296 481,404 6,000 40,000 0 0 800 100,000 0 2,000 65,000 213,800 0 73,440 5,000 Total 12,000 120,000 6,500 0 2,000 280,000 650,000 78,440 135,360 As you can see in the cash flow statement, the surplus amount is very little. At RM8 per annum, this little surplus will not be able to fund the financial goals and objectives of the couple, such as future children's education fund and retirement fund. As a financial planner, how can you help this couple improve their cash flow management? Suggest to this couple what can they do to have better cash flow management. Construct a new cash flow statement based on your suggestions and reccomendations. In recommending changes, you must keep in mind some basic principles: 1. The couple's lifestyle needs to be maintained as original as possible. 2. Any reshuffling of assets, including paying off debts or loans, must leave enough liquid assets that cater to the emergency buffer fund's 3-6 months emergency buffer fund 5,000 130,000 1,205,500 418,856 146,880 23,000 588,736 616,764 3. Repayment of loans must consider what the couple wants to do with their liquid assets like fixed deposits and saving account balance in the near future. (20 marks) Jackson Yin and Angeline Yin are a loving couple married happily for more than five years. They have one child, Denise Yin, aged 3. Jackson works as a Business Services Manager at a private hospital, while Angeline is an English teacher at an international school in Penang. Jackson's gross salary is RM120,000 per annum or net RM89,289 (after tax and EPF deductions), and Angeline's gross salary is RM65,000 or net RM56,685 (after tax and EPF deductions). Jackson and Angeline were schoolmates and college mates. Being the same age, 35 years old, and from the same educational background, they share similar interests and hobbies. Both of them like shopping and travelling. Once every half-year, they will travel overseas or locally for a holiday. They also love eating out at fancy restaurants. They live in an apartment which they bought five years ago at RM500,000. They paid a down payment of RM50,000 and obtained a housing loan for 35 years. The monthly loan repayment is RM 2,060.52 at an interest rate of 4.25% per annum. Both own a car each, purchased with car loans from local banks at the interest rate of 4% per annum flat. Total car loans taken are RM 162,000 to be repaid over nine years. The monthly car instalment repayment is RM2,040. They usually use credit cards for shopping and keep their balances high, more than RM 20,000 at all times and repay only 10% of the outstanding amount every end of the month. The following is their yearly statement of income and expenses: Income Jackson's salary (after tax and EPF) Angeline's salary (after tax and EPF) Interest (2% on savings account) Interest (4% on fixed deposits) TOTAL RM89,289 RM56,685 RM240 RM4,800 Home upkeep Cars instalments Cars maintenance Life insurance Eating out Credit card Groceries Travelling Utilities Housing loan repayments Miscellaneous Expenses RM151,014 TOTAL Surplus RM2.350 RM24,480 RM4,800 RM3,000 RM12,000 RM21,600 RM9,600 RM22.000 RM4,850 RM24,726 RM21,600 EMI51.000 RM8 The following is the balance sheet of the couple: Jackson Item 1. Liquid assets Cash balance Cash deposits Stocks Tax balance - LHDN Life insurance (cash values) 2. Non-Liquid assets EPF Apartment Collectibles Cars TOTAL ASSETS 3. Liabilities Mortgages Car loans Credit card balances a) TOTAL LIABILITIES NET WORTH 6,000 80,000 6,500 0 1.200 180,000 650,000 3,000 65.000 991,700 418,856 73,440 18,000 Angeline 510,296 481,404 6,000 40,000 0 0 800 100,000 0 2,000 65,000 213,800 0 73,440 5,000 Total 12,000 120,000 6,500 0 2,000 280,000 650,000 78,440 135,360 As you can see in the cash flow statement, the surplus amount is very little. At RM8 per annum, this little surplus will not be able to fund the financial goals and objectives of the couple, such as future children's education fund and retirement fund. As a financial planner, how can you help this couple improve their cash flow management? Suggest to this couple what can they do to have better cash flow management. Construct a new cash flow statement based on your suggestions and reccomendations. In recommending changes, you must keep in mind some basic principles: 1. The couple's lifestyle needs to be maintained as original as possible. 2. Any reshuffling of assets, including paying off debts or loans, must leave enough liquid assets that cater to the emergency buffer fund's 3-6 months emergency buffer fund 5,000 130,000 1,205,500 418,856 146,880 23,000 588,736 616,764 3. Repayment of loans must consider what the couple wants to do with their liquid assets like fixed deposits and saving account balance in the near future. (20 marks)
Expert Answer:
Answer rating: 100% (QA)
As a financial planner I would suggest the following changes to help improve the cash flow management of the couple while keeping in mind their lifest... View the full answer
Related Book For
Statistics For Business Decision Making And Analysis
ISBN: 9780321890269
2nd Edition
Authors: Robert Stine, Dean Foster
Posted Date:
Students also viewed these accounting questions
-
1. What evidence is there that Michelle lacks contentment? 2. Inwhat ways is Michelle exhibiting ambivalence toward her finances? 3. What financial idols does Michelle have in her life? 4. What goals...
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
In April 2016, Vanessa bought 100 shares in Entagon plc at a cost of 5 per share. The company went into liquidation and Vanessa received a first distribution of 40p per share in July 2020. The shares...
-
The auditors wish to test the valuation of accounts receivable in the audit of Desert Enterprises of Bullhead City. The client has $500,000 of total recorded receivables, composed of 850 accounts....
-
Would you allow a grandparent to have visitation rights with a grandchild over the objections of the parent(s)? What factors do you think a court should weigh in making these determinations?
-
A thin, smooth sign is attached to the side of a truck as is indicated in Fig. P9.56. Estimate the friction drag on the sign when the truck is driven at \(55 \mathrm{mph}\). Figure P9.56 5 ft 20 ft...
-
The Midwest Division of the Paibec Corporation manufactures subassemblies that are used in the corporations final products, Lynn Hardt of Midwests Profit Planning Department has been assigned the...
-
Major medical complexes and their service providers continue to move toward advanced health informatics - acquiring, managing, and using information to provide better healthcare. A new analyzer for...
-
In June 2017, BMW announced plans to spend $600 million to expand production at its South Carolina plant. The new investment would allow BMW to prepare for new X model SUVs. BMW apparently felt it...
-
Which of the following is sometimes called mass production? a continuous flow process and assemble-to-order b strategy job process and make-to-order strategy c line process and make-to-stock strategy...
-
Identify the majority view regarding professional degrees as property.
-
A 48-kg acrobat must jump high and land on his brother's shoulders. To accomplish this, she leaps from a crouched position to a height where her center of mass is \(1.60 \mathrm{~m}\) above the...
-
A \(27-\mathrm{kg}\) child stands in the center of a trampoline. (a) If the trampoline center is \(0.32 \mathrm{~m}\) lower than before they got on, what is the spring constant of the trampoline? (b)...
-
Describe the various ways in which the courts become involved with separation agreements.
-
An 80-kg man rides in an elevator from the ground to an upper floor. The elevator goes from rest to \(10 \mathrm{~m} / \mathrm{s}\) in 5 seconds, and then continues at the same constant speed for 10...
-
The unhappy couple, Audrey and Bob, divorce after 3 years of marriage. Bob owns the home, but Audrey was given the home as a part of the divorce settlement. What are the implications if they wait 13...
-
On October 1, 2021, Adoll Company acquired 2,600 shares of its $1 par value stock for $38 per share and held these shares in treasury. On March 1, 2023, Adoll resold all the treasury shares for $34...
-
A firm that operates a large, direct-to- consumer sales force would like to implement a sys-tem to monitor the progress of new agents. A key task for agents is to open new accounts; an account is a...
-
A retail chain lines its parking lots depending on the types of vehicles driven by local shoppers. Large trucks and SUVs require bigger spots than compact cars. Each day, while collecting shopping...
-
This table contains accounting and financial data that describe 324 companies operating in the information sector in 2010. The largest of these provide telephone services. One column gives the...
-
The reason that provisions for future repair expenses cannot generally be recognized under IFRS is because they are usually: A. Estimates. B. Owed to third parties. C. Not probable. D. Not present...
-
A retail store would normally recognize revenue when: A. An order is made. B. Cash is received. C. Cash is received or a customer promises to pay. D. The product is taken by (or delivered to) the...
-
Under IFRS, for non-financial companies, most non-current assets are measured at: A. Fair value. B. The lower of cost or fair value. C. Cost less depreciation and impairment. D. Net realizable value.
Study smarter with the SolutionInn App