Jake Stevenson is 35 years old and works full-time as an assistant manager at a retail...

   

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Jake Stevenson is 35 years old and works full-time as an assistant manager at a retail store. He is married to Erika Stevenson who is an associate editor at a fashion magazine, and they have a 5 years old daughter, June. Following is the information on Stevenson's 2021 finances reported on December 31, 2021. Item Amount Balance of Erika's auto loan $8,500 Balance of Jake's auto loan $6,800 Annual car insurance $390 Monthly cell phone bill $100 Erika's monthly American Express credit card payment $845 I Erika's monthly car loan payment $350 Erika's checking account balance $1,200 Annual homeowner insurance Erika's monthly take-home Erika's TFSA balance Erika's monthly TFSA contribution Monthly food: Eating out Monthly food: Groceries Monthly gym membership Monthly home internet bill House: Current market price Monthly hydro $5,500 $5,000 $1,000 $750 $300 $300 $80 $630 $400,000 $150 Annual income tax refund $720 Jake's monthly car loan payment $400 Jake's checking account balance $1,500 Jake's monthly take-home pay $3,500 Jake's savings account balance $8,000 Jake's monthly VISA credit card payment $1,000 June's monthly daycare fee $1,800 Monthly mortgage payment $2,000 Outstanding American Express card balance $2,000 Jake's monthly car loan payment Jake's checking account balance $400 $1,500 Jake's monthly take-home pay $3.500 Jake's savings account balance $8,000 Jake's monthly VISA credit card payment $1,000 June's monthly daycare fee $1,800 Monthly mortgage payment $2,000 Outstanding American Express card balance $2,000 Outstanding mortgage balance $320,000 Outstanding VISA card balance $9,500 Monthly utilities $175 Value of Erika's car $6,000 $9,000 Value of Jake's car Required: (1) Using the information above, prepare a net worth statement as of December 31, 2021, for the Stevensons. (10 marks) I (2) Using the information above, prepare a monthly cash flow statement for the Stevensons. (10 marks) (3) According to Statistics Canada, the Consumer Price Index (CPI), a proxy of inflation rate in Canada rose 3.4% on an annual average basis in 2021, which is the fastest pace since 1991. Imagine the family's income will increase by only 1%, but all expenses except for car and mortgage payments will be 5% higher in 2022 compared to 2021. If you prepare a cash flow statement where TFSA contributions are not included as expenses, what will be their expected monthly surplus/deficit in 2022? (6 marks) Assume the same tax refund in 2022. (4) Based on the current situation and expected change in Stevensons' financial situation, list three recommendations you would make regarding their financial situation. Explain your reasoning for each recommendation. (9 marks) Jake Stevenson is 35 years old and works full-time as an assistant manager at a retail store. He is married to Erika Stevenson who is an associate editor at a fashion magazine, and they have a 5 years old daughter, June. Following is the information on Stevenson's 2021 finances reported on December 31, 2021. Item Amount Balance of Erika's auto loan $8,500 Balance of Jake's auto loan $6,800 Annual car insurance $390 Monthly cell phone bill $100 Erika's monthly American Express credit card payment $845 I Erika's monthly car loan payment $350 Erika's checking account balance $1,200 Annual homeowner insurance Erika's monthly take-home Erika's TFSA balance Erika's monthly TFSA contribution Monthly food: Eating out Monthly food: Groceries Monthly gym membership Monthly home internet bill House: Current market price Monthly hydro $5,500 $5,000 $1,000 $750 $300 $300 $80 $630 $400,000 $150 Annual income tax refund $720 Jake's monthly car loan payment $400 Jake's checking account balance $1,500 Jake's monthly take-home pay $3,500 Jake's savings account balance $8,000 Jake's monthly VISA credit card payment $1,000 June's monthly daycare fee $1,800 Monthly mortgage payment $2,000 Outstanding American Express card balance $2,000 Jake's monthly car loan payment Jake's checking account balance $400 $1,500 Jake's monthly take-home pay $3.500 Jake's savings account balance $8,000 Jake's monthly VISA credit card payment $1,000 June's monthly daycare fee $1,800 Monthly mortgage payment $2,000 Outstanding American Express card balance $2,000 Outstanding mortgage balance $320,000 Outstanding VISA card balance $9,500 Monthly utilities $175 Value of Erika's car $6,000 $9,000 Value of Jake's car Required: (1) Using the information above, prepare a net worth statement as of December 31, 2021, for the Stevensons. (10 marks) I (2) Using the information above, prepare a monthly cash flow statement for the Stevensons. (10 marks) (3) According to Statistics Canada, the Consumer Price Index (CPI), a proxy of inflation rate in Canada rose 3.4% on an annual average basis in 2021, which is the fastest pace since 1991. Imagine the family's income will increase by only 1%, but all expenses except for car and mortgage payments will be 5% higher in 2022 compared to 2021. If you prepare a cash flow statement where TFSA contributions are not included as expenses, what will be their expected monthly surplus/deficit in 2022? (6 marks) Assume the same tax refund in 2022. (4) Based on the current situation and expected change in Stevensons' financial situation, list three recommendations you would make regarding their financial situation. Explain your reasoning for each recommendation. (9 marks)