FIN $350$ Project Case Study

You are a CFP$$ professional and have met with Alix and Eddy Pereira, who have come to you for help with several financial planning goals. Alix and Eddy own a computer software company: E & A$,$ LLC$.$ Alix is $32$ years old, and Eddy is $37$ years old. They are happily married and have two children: Tomas $($age $5)$ and Maya $($age $3).$ All family members are in good health, and the family has no history of serious health issues. Based on these facts, along with their family health histories, Alix and Eddy each expect to live to be $90$ years old. Alix and Eddy have completed a risk tolerance questionnaire, which indicates that they have a high tolerance for risk. They would like their portfolio and investment decisions to be based on their expected wealth, their desire for security, the funding levels that they are trying to achieve, and the likelihood of achieving those funding levels.

Retirement Planning$-$ Alix and Eddy would like to continue to run their business until Alix turns $62,$ at which time the couple would like to sell the company and retire. They anticipate that the business will continue to generate the same amount of income each year, that their personal expenses will remain constant until retirement, and that they will net $$5$ million from the sale of the business when they retire. Based on an analysis of current expenses on their income statement along with their expected spending in retirement, Alix and Eddy anticipate that their annual personal expenses in retirement will be $80\%$ of their total annual expenses today. You have mutually agreed to base your retirement planning recommendations on this assumption.

Review the Project Case Study provided above. Then, using your financial calculator, calculate and address each of the following in a minimum of $36$ sentences using the template provided. Include an appendix to show your detailed calculations and cite them appropriately. For example, $$Funding needed is $3\mathrm{.}340$ USD $($see Appendix A$).$

$1.$ Using the annuity method, perform the time value of money calculations to determine the client's retirement funding needs. Address the following in your response and include any assumptions used in making your recommendations:

A$.$ The client$$s total retirement funding need at retirement age

B$.$ The annual savings required to meet the retirement goal

$2.$ Using the uneven cash$-$flow method for multiple children, perform the time value of money calculations to determine the client$$s educational funding needs. Address the following in your response and include any assumptions used in making your recommendations:

A$.$ Net present value $($NPV$)$ of the total funding need

B$.$ The annual savings required to meet the education goal

$3.$ Propose budget recommendations that fit with the client$$s financial data that address the opportunities identified. Address the following in your response and include any assumptions used in making your recommendations:

A$.$ Financing strategies

B$.$ Debt management

C$.$ Cash$-$flow management

i$.$ Income

ii$.$ Expenses