PART ONE- FOUNDATIONS IN FINANCIAL PLANNING 100 points total Due on May 9th Megan and Kevin Lee-The Newlyweds Compare the ratios with the age appropriate benchmark to analyze the client's finaricial condition. (20 points) 6, Assume that Megan and Kevin can earn 2% after inflation and taxes on their emrEency fund and 4% after inflation and taxes on the car goals. In figuring the savings required for Kevin's father's retirement fund, Megan and Kevin assume that they could earn 7% after taxes and inflation on the money once his father retires. While they are accumulating the money, they feel they can take more risk and earn 9% after taxes and inflation. Usinn time value calculations, how much would Megan and Kevin have to save this year to be on track in meeting their goals for the second car, the dowi payment for a now car to replacr the Explarer and the fund for Kevin's father's retirement years? (20 polnts) After reading Chapters1, 2 and 3, you probably realize that Meganand Kevin's financial goals are not defined well enough in the ornginal case to serve as the basis for their financial plan and cash budget. Upon further review, Megan and Kevin have restated their financial goals n order of priority as follows: Pay off all existing credit card balances within the next 2 years. Have liquid assets equal to 3 month's net salary within the next 2 years foran Emergency fund. Save $10,000 for the purchase of a second car in 3 years. Buy a house within 5 years. Megan and Kevin plan on usingthe inherited funds that are currently invested in the Fidelity Magellan mutual fund for this goal. . Use the two step/three panel approach combined with metric approach in order to analyze the client's financial independence and risk profile. Make appropriate recommendation to stabilize the risk profile, debt management,savings and investment management. [20 points 7. . .Save $6,000 for a down payment on a new car to replace the Explorer within 5 years. . Increase contributions to Kevin's 401(k) plan from 5% to 8% cf hEross salary. Have enough acoumulatedin an account to provide Kevin's father $12,000 a year during his retirement years. They expect Lyle will retire in 20 years at age 70 and will lve 15 years after retirement. Kevin and Megan would like to have all the money accumulated by the time Lyle retires. Establish a regular savings/investment program to accomplish these goals. Megan and Kevin Lee would like your help in starting their financial plan. Review Megan and Kevin's financial and prrsonal information befare answering the following questions 1. Which phase of life cycle is Megan and Kevin Lee are most likely in? 5 points) 2. using the January 1, 2002 asset and liability information, develop a balance sheetfor Megan and Kevin Lee. Assume they have no unpaid bills. What is the Lee's net worth? (10 points) 3. Using the income and expenditure Infomationfor 2001, complete an income and Expense statement for Megan and Kevin. Use the "cash flow" concept for this Financial statement including all money inflows as income and all outflows as Expenditures. Did Megan and Kevin have a cash surplus or a cash deficit in 2001? What impact dors the 2001 cash surplus (deficit) have on the following years (January1, 2002) balance sheet? (10 polnts) Use the Pie Chart approach to visualy represent the cient's currentfinancial situation and compare it with benchmark to make recommendations (15 points) 4. 5. Based on Megan arid Kevins financial statements, calculate the folowing ratias: Liquidity ratio Debt ratio Ratios for financial security PART ONE- FOUNDATIONS IN FINANCIAL PLANNING 100 points total Due on May 9th Megan and Kevin Lee-The Newlyweds Compare the ratios with the age appropriate benchmark to analyze the client's finaricial condition. (20 points) 6, Assume that Megan and Kevin can earn 2% after inflation and taxes on their emrEency fund and 4% after inflation and taxes on the car goals. In figuring the savings required for Kevin's father's retirement fund, Megan and Kevin assume that they could earn 7% after taxes and inflation on the money once his father retires. While they are accumulating the money, they feel they can take more risk and earn 9% after taxes and inflation. Usinn time value calculations, how much would Megan and Kevin have to save this year to be on track in meeting their goals for the second car, the dowi payment for a now car to replacr the Explarer and the fund for Kevin's father's retirement years? (20 polnts) After reading Chapters1, 2 and 3, you probably realize that Meganand Kevin's financial goals are not defined well enough in the ornginal case to serve as the basis for their financial plan and cash budget. Upon further review, Megan and Kevin have restated their financial goals n order of priority as follows: Pay off all existing credit card balances within the next 2 years. Have liquid assets equal to 3 month's net salary within the next 2 years foran Emergency fund. Save $10,000 for the purchase of a second car in 3 years. Buy a house within 5 years. Megan and Kevin plan on usingthe inherited funds that are currently invested in the Fidelity Magellan mutual fund for this goal. . Use the two step/three panel approach combined with metric approach in order to analyze the client's financial independence and risk profile. Make appropriate recommendation to stabilize the risk profile, debt management,savings and investment management. [20 points 7. . .Save $6,000 for a down payment on a new car to replace the Explorer within 5 years. . Increase contributions to Kevin's 401(k) plan from 5% to 8% cf hEross salary. Have enough acoumulatedin an account to provide Kevin's father $12,000 a year during his retirement years. They expect Lyle will retire in 20 years at age 70 and will lve 15 years after retirement. Kevin and Megan would like to have all the money accumulated by the time Lyle retires. Establish a regular savings/investment program to accomplish these goals. Megan and Kevin Lee would like your help in starting their financial plan. Review Megan and Kevin's financial and prrsonal information befare answering the following questions 1. Which phase of life cycle is Megan and Kevin Lee are most likely in? 5 points) 2. using the January 1, 2002 asset and liability information, develop a balance sheetfor Megan and Kevin Lee. Assume they have no unpaid bills. What is the Lee's net worth? (10 points) 3. Using the income and expenditure Infomationfor 2001, complete an income and Expense statement for Megan and Kevin. Use the "cash flow" concept for this Financial statement including all money inflows as income and all outflows as Expenditures. Did Megan and Kevin have a cash surplus or a cash deficit in 2001? What impact dors the 2001 cash surplus (deficit) have on the following years (January1, 2002) balance sheet? (10 polnts) Use the Pie Chart approach to visualy represent the cient's currentfinancial situation and compare it with benchmark to make recommendations (15 points) 4. 5. Based on Megan arid Kevins financial statements, calculate the folowing ratias: Liquidity ratio Debt ratio Ratios for financial security