Case Study Source Information You work as a Financial Planning Adviser and have been asked to assist with two new clients. You have received background information on each client (see below). Client Name Ingrid Clare and Alan Age 30 52 and 51 Status Single, owner of apartment Married, joint owners of house Dependents Nil Two children (age 12 and 14) Occupation Helicopter Pilot Manager of hospitality business (Clare) and High School teacher (Alan) Net Income AUD225,000 pa from salary AUD145,000 pa (Clare) and AUD115,000 pa (after super and after (Alan) from salary tax) Expenses AUD165,000 pa including the bank AUD175,000 pa including the bank loan (living and financial) loan Major assets Cash at bank AUD10,000 Cash at bank AUD25,000 Share portfolio AUD100,000 Superannuateon AUD650,000 Superannuateon AUD80,000 House AUD1.1 million Apartment AUDO.7 million Major liabilities Bank loan for the apartment Bank loan for the house AUD525,000 AUD350,000 (interest only loan) (interest only loan) Major financial goals Purchase a second apartment as an Operate a conservative budget until the investment within two years (price children complete high school approx AUDO.8 million) with 20% cash and 80% bank loan You have had an introductory meeting with each new client to obtain a better understanding of their circumstances, financial goals and risk preferences. Below are some notes from those meetings.Ingrid: - Is an experienced helicopter pilot that works for a company that provides emergency medical transport services. - Typically, Ingrid works 12 hour shifts in accordance with a roster. Sometimes, when attending to an emergency call, Ingrid must work extended hours until the call is completed. These extended hours are paid in addition to her salary as overtime. In a typical year, the overtime equates to an additional payment of approximately 20% of salary. - Ingrid lives in a two bedroom apartment and is planning to purchase a second apartment as an investment. - Ingrid is relatively well paid and spends significant amounts of money on fashion, entertainment and overseas holidays. - Ingrid has a good understanding of nancial markets and is familiar with the concept of risk and return. - Both personally and financially, Ingrid is considered to not he a risk taker. Clare and Alan: - For Clare and Alan, family is their top priority and they manage their time to ensure that their family and work life are balanced. The children are settled and happy at a local state school. - They are considering the purchase of a \"tiny house\" to be located on some unused space at the rear oftheir property. The tiny house would be rented for short term holiday accommodation, similar to a "bed and breakfast\". - Both Clare and Alan are well educated, nancially literate and consider themselves to be risk takers they assess each opportunity on its merits. But they would never place in jeopardy their family or their family wealth. Issue 2: the financial capacity to service the bank loan (interest and principal) The interest on the bank loan is 5% with monthly repayments and a term of 20 years. The net rental expected from the investment apartment is AUD2,250 per month (this is AFTER allowances for expenses and taxes but is BEFORE allowance for servicing the bank loan). Ingrid has requested the following: the loan repayment amount per month (4 marks) - the revised personal budget surplus per month (2 marks)