Carol has just turned 32 years of age on 1st June 2020 and has been working as an IT professional for ten years. She earns $115,000 per year in salary after tax. Carol came to Australia twelve years ago, but her immediate family continues to live in the United States. As a result, Carol had to learn very quickly to look after herself and her financial affairs. Carol shares a flat with a friend, Jane, and her share of the rent is $550 per week. Carol's other weekly expenses include: • Public transport fares $140 • Utility bills $100 • Mobile phone $85 • Food $250 • Clothes $200 • Miscellaneous $50 3 Carol is always conscious to ensure that she is saving some of her income and has arranged an automatic debit for $1,000 from her bank account into the United Australian Imputation Fund each month. The amount accumulated in the fund comprises the original $5,000 she was given for her twenty-fifth birthday to start the fund and contributions and earnings of $10,000, giving a total sum of $15,000. The managed fund is a growth fund with a portfolio of Australian share investments. If Carol has any money left over, she keeps it in her bank account, which totals $8,000. Carol is sick of travelling on buses and trains and wants to buy a car in the next 12 months if she can afford it. If possible, she does not want to use her managed fund, but hopes to save enough ($25,000) to buy the car. Additionally, she would like to purchase a small unit in an inner suburb of Sydney in the next two years, which she estimates would cost her $900,000. She currently has no insurance cover but has a short-term personal loan at an annual interest rate of 12%, the current balance being $8,000 which is required to be paid in full six months from now. In 2023, she would like to take a holiday to see her brothers and sisters in the United States. She estimates she would need $15,000 to undertake this holiday. a. This is your first meeting with Carol. What issues do you believe you should discuss with her? (6 marks) b. What are Carol's goals? (6 marks) c. write up an annual cash-flow budget for Carol to assist her in determining whether she has any excess savings capacity. Ignore investment return from a managed fund. (6 marks) d. Explain to Carol the need for a comprehensive data-collection instrument. (6 marks) e. Discuss with Carol the financial planning process and the responsibilities of both the client and the adviser.

Answer rating: 100% (QA)

a In your first meeting with Carol you should discuss the following issues Income and Expenses Review her current income which is 115000 per year after tax and her weekly expenses including rent publi... View the full answer