Today is January 1, 2022. Archie and Elaine Peyton have come to you, a financial planner, for help in developing a plan to accomplish their financial goals. From your initial meeting together, you have gathered the following information.

Personal Background and Information

Archie Peyton (Age 47)

Archie is an executive in ABC Company, a closely held corporation. His current salary is $100,000, and he expects increases of 5% per year.

Elaine Peyton (Age 50)

Elaine is Archie's part-time administrative assistant. Her present salary is $24,000.

She expects raises of 5% per year.

This is a second marriage for Elaine. Her first husband, Jerry, died five years ago.

Elaine was the beneficiary of Jerry's $250,000 life insurance policy with which she created her investment portfolio.

The Peytons

Archie and Elaine have been married for three years. They do not reside in a community property state.

The Children

Elaine has two children from her first marriage, Jerry Jr., age 16, and Christopher, age 12. Archie and Elaine have one daughter, Kelsey, who is now 2 years old. All of the children live with them. The children are cared for during the day by their paternal grandmother who lives next door.

When they were first married, Archie wanted to adopt Jerry Jr. and Christopher, but the children refused. Since then, Archie and the two boys have been in continual conflict. As a result, Elaine expects to use her investment portfolio to

pay for the boys' education, without any assistance from Archie.

Personal and Financial Objectives

1. The Peytons want to plan for their children's college education. They plan for each child to attend a private institution for five years beginning at age 18 with a cost of $25,000 a year per child (today's cost). The expected educational inflation rate is 6%.

2.Archie and Elaine expect to need 80% of their current pretax income during retirement. They want to retire when Elaine will be 65. Archie would be 62 at that time. They expect their joint retirement period to be 30 years.

Economic Information

• Inflation has averaged 4% over the last 20 years.-
• Inflation is expected to be 3.5% for the foreseeable future. Current Yields for Treasury Securities

	3 Months 6 Months 9 Months 1 Year			3 Years	5 Years	10 Years		20 Years 25 Years	30 Years
1.00%	1.50%	1.70%	2.00%	2.50%	2.75%	3.00%	3.25%	3.50%	4.00%

Current Mortgage Rates

4.25% for 30-year loans

3.75% for 15-year loans

Closing costs of 3% will not be included in the refinancing of the existing mortgage.

Economic Outlook-Investments

	Expected Returns (Pretax)	Expected Standard Deviation
Aggressive stocks	15.0%	15.0%
Growth stocks	12.0%	10.0%
S&P 500 Index	10.0%	8.0%
Corporate bonds	7.0%	3.0%
Money markets	1.5%	1.0%
90-day T-bills	1.0%	1.0%

Insurance Information

Life Insurance

	Policy A	Policy B	Policy C	Policy D
Insured	Archie	Archie	Elaine	Elaine
Owner	Archie	Archie	Elaine	Elaine
Beneficiary	Archie's mother	Estate of Archie	Jerry Jr. & Christopher (equally)	Jerry Jr. & Christopher (equally)
Original amount	$200,000	$100,000	$48,000	$50,000
Policy type	Group term	30-year decreasing term	Group term	Modified premium whole life
Cash value	$0	$0	$0	$0
Annual premium	$250	$100	$60	$420
Premium payor	Employer	Archie	Employer	Elaine
Date purchased	Annually	2013	Annually	2018
Current coverage	$200,000	$75,000	$48,000	$50,000

Health Insurance

The entire family is covered under the ABC Company health insurance plan. The Peytons currently pay $200 per month for the employer-provided major medical plan.

The deductible is $500 per person up to a maximum of three persons. The policy contains a stop-loss limit of $5,000 per year and an 80/20 coinsurance provision.

Disability Insurance

Archie has a personally owned disability insurance policy that covers accident and sickness and has an own occupation definition with a 180-day elimination period.

The policy pays monthly benefits of 60% of current gross income until Archie reaches age 65.

Homeowners Insurance

	HO-2 Policy
Dwelling	$150,000
Other structure	$ 15,000
Personal property*	$ 75,000
Loss of use (20% of dwelling)	$ 30,000

*No rider for replacement value on personal property.

There is an endorsement for furs and jewelry (premium $30 annually).

Scheduled Personal Property Endorsement

This Endorsement Changes the Policy. Please Read Carefully.

For an additional premium, we cover the classes of personal property indicated by an amount of insurance. This coverage is subject to the DEFINITION, SECTION 1-CONDITIONS, SECTIONS I AND II-CONDITIONS and all provisions of this endorsement. The Section I deductible as shown on the Declarations does not apply to this coverage.

Class of Personal Property		Amount of Insurance	Premium
1. Jewelry, as scheduled		$10,000	$30
2. Furs and garments trimmed with fur or consisting principally of fur, as scheduled.		Same as 1
	Cameras, projection machines, films, and related articles of equipment, as listed.	$5,000	$30
4.	Musical instruments and related articles of equipment, as listed. You agree not to perform with these instruments for pay unless specifically provided under this policy.
5.	Silverware, silver-plated ware, goldware, gold-plated ware, and pewterware, but excluding pens, pencils, flasks, smoking implements, or jewelry.
6. Golfer's equipment meaning golf clubs, golf clothing, and golf equipment.
7. Fine arts, as scheduled. This premium is based on your statement that the property insured is located at the following address.
Postage stamps
9.	Rare and current coins

Schedule

SCHEDULE*
Article	Description	Amount of Insurance
Diamond Bracelet	12 pure 1/3k diamonds, 14k white gold setting	$3,000
Diamond Necklace	18" 14k gold chain, pure 2k diamond pendant	$7,000
T-Max 90	35 mm body	$ 500
300Z lens		$3,000
Hasenbladt	camera body + 2 lens	$1,500
	THE AMOUNTS SHOWN FOR EACH ITEM IN THE SCHEDULE ARE LIMITED BY CONDITION 2. LOSS SETTLEMENT ON PAGE 3 OF THIS ENDORSEMENT
* Entries may be left blank if shown elsewhere in this policy for this coverage

Automobile Insurance

PERSONAL AUTO POLICY DECLARATIONS PAGE

COVERAGES

	Auto 1 Auto 2	Semiannual Premium
Part A-Liability	$100,000/$300,000 $100,000/$300,000	$400
Part B-Medical payments	$10,000 $10,000	$100
Part C-Uninsured motorists	$100,000/$300,000 $100,000/$300,000	$150
Part D -Damage to your auto Collision Other than collision
	$500 deductible $500 deductible $250 deductible $250 deductible	$100 $ 70
Towing and labor	$100 maximum $100 maximum	$ 10
Total semiannual premium		$830

Investment Information

During Elaine's marriage to Jerry, an education fund was established for both Jerry Jr. and Christopher. Since Jerry died, Elaine has no longer contributed to this fund.

At the present time, the fund balance is $22,747. The money was invested at 6%, and the Peytons have the option of renewing the short-term certificate of deposit (CD) in April at an interest rate of 4%.

When Elaine received the life insurance proceeds of $250,000 from Jerry's death, she asked a broker to help her manage the money. Her broker, John, placed her funds in an investment account over which he has full discretion. John's record regarding Elaine's investment portfolio over the last five years is as follows.

	2017	2018	2019	2020	2021
Load-adjusted total return	(10.0)	?	(8.5)	12.0	3.0

Elaine did not have the information for 2018 and has been unable to obtain it from John.

Elaine considers herself to be a conservative to moderate investor and has little experience or education in investments. Archie believes that he is a more moderate investor, and he has more experience with investments than Elaine.

Income Tax Information

The Peytons are in the 22% marginal tax bracket for federal income tax and 7% for state income tax.

Retirement Information

Both Elaine and Archie plan to retire when Elaine turns 65. They expect their retirement portfolio to earn a 10% pretax average annual rate of return. They also expect their retirement period to last 30 years. Social Security retirement benefits for Archie are expected to be $26,000 annually at age 67, while Elaine's Social Security benefit will be $9,600 annually at age 67.

Archie has not contributed to the traditional IRA in several years.

ABC Company sponsors a profit-sharing plan with a Section 401(k) feature. The Section 401(k) component of the plan allows participants to defer up to 25% of salary.

The plan also matches $0.50 for every dollar contributed, up to 6% of salary. Neither Archie nor Elaine has ever made deferrals to the plan, but both have vested balances in the plan, as follows.

Vested Balance as of January 1, 2022
Archie	$80,000
Elaine	$12,000

The plan allows participants to self-direct their retirement plan assets through the choice of various mutual funds.

The investment options for the retirement plan are as follows.

XYZ Small Company Growth Fund

Fund objective: The Fund seeks long-term growth of capital.

Portfolio concept: The Fund invests primarily in common stock of small-and medium-size companies that are early in their life cycle and have the potential to become major enterprises.

XYZ Growth Fund

Fund objective: The Fund seeks growth of capital and, secondarily, income.

Portfolio concept: The Fund seeks to invest in equity securities (stocks) placing primary emphasis on those securities that Fund Management believes to be undervalued. The Fund may invest up to 20% in foreign securities.

XYZ Index Fund

Fund objective: The Fund seeks to approximate the total return of the S&p 500 Index.

Portfolio concept: The Fund invests primarily in a portfolio of equity securities (stocks) that are included in the S&P 500 Index.

XYZ Foreign Fund

Fund objective: The Fund seeks long-term capital growth through investments in stocks and debt obligations of companies and governments outside the United States.

Portfolio concept: The Fund generally invests in common stocks; however, it may also invest in preferred stocks and certain debt securities, rated or unrated, such as convertible bonds and bonds selling at a discount.

XYZ Balanced Fund

Fund objective: The Fund seeks the highest total investment return consistent with prudent risk.

Portfolio concept: The Fund has a fully managed investment policy utilizing equity, debt, and convertible securities.

XYZ Income Fund

Fund objective: The Fund seeks a high level of income, consistent with the prudent investment of capital, through a flexible investment program emphasizing high-grade bonds.

Portfolio concept: The Fund invests primarily in a broad range of high-grade, income-producing securities, such as corporate bonds and government securities.

XYZ Money Market Fund

Fund objective: The Fund seeks preservation of capital, current income, and liquidity.

Portfolio concept: The Fund is a money market mutual fund that seeks capital preservation, current income, and liquidity through investment in a portfolio of high-quality, short-term money market instruments, including securities is issued by the U.S. government, its agencies, or instrumentalities.

The company has made the following profit-sharing contributions to the retirement plan for Archie and Elaine for each of the related years.

All contributions are made December 31 of the indicated year.

	Archie	Elaine
2021	None	None
2020	$15,000	$3,600
2019
2018	$13,605	$3,265
2017	$10,366	$2,488
2016	$ 8,954	$2,369
Balance 1/1/16	$25,000

ANNUALIZED RETURNS OF RETIREMENT FUNDS

	2011	2012	2013	2014	2015	2016	2017	2018	2019	2020	2021
XYZ Small Co. Growth Fund	|			|				|	4.83%	41.14%	15.01%
XYZ Growth Fund	I		I	32.96%	0.03%	25.20%	9.97%	32.37%	1.77%	36.82%	14.50%
xYZ index Trust	|						|	9.66%	1.02%	37.23%	13.25%
XYZ Foreign Fund	28.77%	24.75%	21.99%	30.53%	-3.01%	18.25%	0.10%	36.82%	0.35%	11.15%	7.08%
XYZ Balanced Fund	19.89%	4.60%	17.04%	22.98%	1.08%	24.69%	5.03%	13.71%	0.91%	32.87%	11.60%
XYZ Income Fund	14.75%	0.74%	8.91%	12.75%	8.32%	17.32%	6.74%	12.58%	-4.43%	18.54%	9.21%
XYZ Money Market Fund	4.21%	3.87%	4.01%	5.02%	5.40%	4.75%	5.00%	5.25%	6.01%	6.71%	5.20%

Gifts, Estates, Trusts, and Will Information

They do not have any estate planning documents at this time.

STATEMENT OF CASH FLOWS

Archie and Elaine Peyton

For January 1, 2021 to December 31, 2021

(Projected to be similar for 2022)

CASH INFLOWS
Salaries
Archie	100000
Elaine	24,000
Total salaries $124,000
Investment income
ML Brokerage Account	$ 1,250
Elaine's investment portfolio	3,934
Savings account	150
Elaine's education fund	1,062
Investment income	6,396
Total cash inflows	$ 130,396
CASH OUTFLOWS
Living expenses
Food	$4,300
Clothing	4,000
Entertainment	6,500
Utilities, cable, and phone	5,000
Auto maintenance	1,200
Church	2,000
Home mortgage	8,999
Auto loans	18,818
Credit card	4,300
Total living expenses	$ 55,117

Insurance
Health	$ 2,400
Auto	1,660
Life	520
Homeowners with endorsements	950
Disability	1,677
Total insurance	7,207
Taxes
Property (residence)	$ 4,452
Federal income (withholdings)	12,000
State income	4,000
Payroll (FICA) (Schedule 1)	9,486
Total taxes	$ 29,938
Total cash outflows	$ 92,262
Net cash flow (surplus)	$38,134

Schedule 1: Payroll Taxes

Old-Age, Survivors, and Disability Insurance

Archie $100,000 6.2% = $6,200

Elaine $ 24,000 6.2% = $1,488

$7,688

Medicare

Archie $100,000 x 1.45% = $ 1,450

Elaine $ 24,000 x 1.45% = $348

Total= $ 9, 486

2022 Payroll Tax Limits
	Income	Tax Rate
OASDI	$147,000	6.2%
Medicare	Unlimited	1.45%

STATEMENT OF CASH FLOWS

Archie and Elaine Peyton

For January 1, 2021 to December 31, 2021

(Projected to be similar for 2022)

CASH INFLOWS
Salaries
Archie	100000
Elaine	24,000
Total salaries $124,000
Investment income
ML Brokerage Account	$ 1,250
Elaine's investment portfolio	3,934
Savings account	150
Elaine's education fund	1,062
Investment income	6,396
Total cash inflows
CASH OUTFLOWS
Living expenses
Food $ 4,300
Clothing	4,000
Entertainment	6,500
Utilities, cable, and phone	5,000
Auto maintenance	1,200
Church	2,000
Home mortgage	8,999
Auto loans	18,818
Credit card	4,300
Total living expenses	$ 55,117

Insurance
Health	$ 2,400
Auto	1,660
Life	520
Homeowners with endorsements	950
Disability	1,677
Total insurance	7,207
Taxes
Property (residence)	$ 4,452
Federal income (withholdings)	12,000
State income	4,000
Payroll (FICA) (Schedule 1)	9,486
Total taxes	$ 29,938
Total cash outflows	$ 92,262
Net cash flow (surplus)	$38,134

2022 Payroll Tax Limits
	Income	Tax Rate
OASDI	$147,000	6.2%
Medicare	Unlimited	1.45%

STATEMENT OF FINANCIAL POSITION

Archie and Elaine Peyton

As of December 31, 2021

Assets'				Liabilities? and Net Worth
	Liquid assets			Short-term liabilities
JT	Checkings	$ 7,500	S2	Credit cards $ 4,300
JT	Savings	15,450
	Total liquid assets	$ 22,950		Long-term liabilities
	Invested assets		JT	Home mortgage $140,503
S1	First Mutual Growth Funds	$ 7,950	S1/S2	Auto loans 40,069
S1	ML Brokerage Accounts	100,000	S1	Margin loan? 7,500
S2	Elaine's investment portfolio	210,000		Total long-term $188,072
S2	Elaine's education fund	22,747
$1	Archie's vested retirement plan account	80,000		Total liabilities $192,372
$2	Elaine's vested retirement plan account	12,000
S1	Archie's individual retirement	9,000
	account (IRA) Total invested assets	$441,697
	Personal use assets
	Home	$185,000		Net worth $557,275
S1	Truck	32,000
52	Car	21,000
S1	Boat	10,000
S2	Furs and jewelry	10,000
JT	Furniture and household	27,000
	Total personal use assets	$285,000		Total liabilities
	Total assets	$749,647		and net worth $749,647

Notes to financial statements

'All assets are stated at fair market value

Liabilities are stated at principal only.

The checking account is a noninterest-bearing account.

*The savings account earns 1% per year.

See detail of fund.

• ML Brokerage Account is stated at gross value, which does not include margin loan of $7,500.
• Margin loan is for ML Brokerage Account. Interest rate is currently 8%.

Archie's IRA is currently invested in CDs at a local bank.

Title designations

S1 = Archie's property

S2 = Elaine's property

JT = Joint tenancy with right of survivorship

Information Regarding Assets and Liabilities

Investment Income

ML Brokerage Account
Money market $ 100
Bonds	1,750
Margin interest	(600)
$1,250
Elaine's investment portfolio
Bonds	$ 463
Stocks	3,471
	$3,934
Savings account	$ 150
Elaine's education fund	$1,062
TOTAL	$6,396

House

Principal residence	January 1, 2019 (purchase)
Fair market value (current)	$185,000
Original loan	$148,000
Term	30 years
Interest rate	4.5%
Monthly payment	$749.89
Remaining mortgage	$140,503
Remaining term	27 years

Boat

The boat is a 90-horsepower fishing boat that was originally bought for $10,000

and is owned outright.

Automobiles

	Archie's 2020 Truck	Elaine's 2019 Car
Purchase price	$40,000	$35,000
Down payment	$0	$10,000
Term	48 months	48 months
Interest rate	7%	8%
Monthly payment	$957.85	$610.32
Payments remaining	33	20
Outstanding balance	$28,677.07	$11,392.23

		Account Name: Archie Peyton Account Number: AB100402
		Balances
Money Market	Price/share	Shares	Current Yield		Fair Market Value
Money market	$ 1.00	6,667.00	1.5%		$6,667.00
Bonds	Maturity	Coupon	Cost Basis		Fair Market Value
$10,000 U.S. Treasury note	5	2.75%	$10,351.18		$10,000.00
$15,000 U.S. Treasury bond	25	2.50%	13,138.64		10,579.83
$50,000 U.S. Treasury bond	30	0.00%	4,093.40		3,982.02
$20,000 Davidson debenture	20	5.50%	17,455.93		16,288.44
			$45,039.15		$40,850.29
Stocks	Price/share	Shares	Cost Basis		Fair Market Value
Stock 1*	$ 5.20	2,000	$10,000		$10,400
Stock 2*	$ 4.85	1,500	6,750		7,275
Stock 3*	$26.00	500	11,250		13,000
			$28,000		$30,675
* These stocks do not currently pay dividends.
Mutual Funds	Price/share	Shares	Cost Basis		Fair Market Value
Emerging growth fund	$21.00	500	$12,250		$10,500
Balanced fund	$18.00	425	8,925		7,650
Municipal bond fund	$12.00	250	3,500		3,000
			$24,675		$21,150
Note: All distributions from these funds are reinvested.
	Number of			Option	Fair Market
Options	Options Contracts	Option Premium	Exercise Price	Expiration	Value
Stock 2 call options	5	$3.00	$ 5.50	July 2022	$486.37
Stock 3 put options	5	$5.00	$24.00	March 2022	$171.34
					$657.71
TOTAL ACCOUNT VALUE					$100,000
MARGIN LOAN BALANCE					$7,500
NET ACCOUNT VALUE					$92,500

First Mutual Growth Fund

Account Name: Archie Peyton

Account Number: AB100357

Transaction	Date	Amount	Price/ Share	Shares	Total Shares	Total Value
Buy	04/01/20	$ 2,500	$25.00	100	100	$ 2,500
Buy	08/01/20	$ 4,000	$20.00	200	300	$ 6,000
Reinvest dividend	12/01/20	$ 500	$12.50	40	340	$ 4,250
Buy	02/01/21	$ 3,000	$15.00	200	540	$ 8,100
Buy	04/01/21	$ 2,000	$20.00	100	640	$12,800
Buy	06/01/21	$ 1,500	$25.00	60	700	$17,500
Sell	12/01/21	$11,880	$27.00	(440)	260	$ 7,020
Reinvest dividend	12/01/21	$ 1,080	$27.00	40	300	$ 8,100
BALANCE	12/31/21		$26.50		300	$ 7,950

Note: All distributions from this fund are reinvested.

First Mutual Growth Fund

Account Name: Archie Peyton

Account Number: AB100357

Transaction	Date	Amount	Price/ Share	Shares	Total Shares	Total Value
Buy	04/01/20	$ 2,500	$25.00	100	100	$ 2,500
Buy	08/01/20	$ 4,000	$20.00	200	300	$ 6,000
Reinvest dividend	12/01/20	$ 500	$12.50	40	340	$ 4,250
Buy	02/01/21	$ 3,000	$15.00	200	540	$ 8,100
Buy	04/01/21	$ 2,000	$20.00	100	640	$12,800
Buy	06/01/21	$ 1,500	$25.00	60	700	$17,500
Sell	12/01/21	$11,880	$27.00	(440)	260	$ 7,020
Reinvest dividend	12/01/21	$ 1,080	$27.00	40	300	$ 8,100
BALANCE	12/31/21		$26.50		300	$ 7,950

Note: All distributions from this fund are reinvested.

Elaine's Investment Portfolio

Bonds
Bonds	Term to Maturity	Duration	Current Fair Market Value
$10,000 U.S. Treasury bonds	10	7.12 years	$10,000
$5,000 U.S. Treasury bonds	20	16.95 years	$ 5,000
Total value of bonds $15,000

Stocks

Shares	Stock		Beta		RZ	P/E Ratio	Dividend Yield	Basis	Fair Market Value
1,000	Stock A	6%	0.65	11 %	75%	13.0	3.0%	$30,000	$ 38,000
575	Stock B	11%	0.75	9%	65%	14.0	3.7%	$45,000	$ 46,000
200	Stock C	7%	0.65	10%	30%	15.1	3.7%	$20,000	$ 17,000
500	Stock D	3%	0.70	8%	45%	25.2	0.0%	$11,000	$ 8,500
1,000	Stock E	25%	0.95	15%	70%	14.4	0.0%	$20,000	$ 18,000
1,250	Stock F	22%	1.10	18%	20%	11.1	0.0%	$23,000	$ 25,000
								Total value of stocks	$152,500

Mutual Funds

Shares	Mutual Fund	Style	X	Alpha	Beta	O	R2	Front-End Load	Expense Ratio	Basis	Fair Market Value
210	Fund A	MG	14%	3%	1.10	12%	57%	45%	.71%	$ 2,500	$ 2,625
300	Fund B	LG	11.5%	.5%	0.94	8%	81%	4.5%	1.0%	$ 5,000	$ 5,100
443	Fund C	MV	6%	(4%)	0.65	8%	42%	4.5%	2.25%	$10,000	$11,075
1,000	Fund D	MG	-6%	(10%)	0.70	20%	4%	4%	1.85%	$ 8,000	$ 7,500
320	Fund E	LG	4%	(3 %)	1.10	5%	60%	0%	1.75%	$ 9,500	$ 8,000
410	Fund F	LG	7%	(2.5%)	0.90	3%	78%	3%	1.5%	$10,000	$ 8,200
		Note: All distributions from the mutual funds are reinvested.							Total value of mutual funds		$42,500

TOTAL PORTFOLIO VALUE

$210,000

Key
X	5-year average return
O	Standard deviation
R2	Coefficient of determination
L	Large
M	Medium
G	Growth
V	Value

Pretend that you are sitting across from Archie and Elaine Peyton and make recommendations to them for how they can achieve either #1 or #2 of their Personal and Financial Objectives.(goals listed below) please provide thorough explanation.

1. The Peytons want to plan for their children's college education. They plan for each child to attend a private institution for five years beginning at age 18 with a cost of $25,000 a year per child (today's cost). The expected educational inflation rate is 6%.

2. Archie and Elaine expect to need 80% of their current pretax income during retirement. They want to retire when Elaine will be 65. Archie would be 62 at that time. They expect their joint retirement period to be 30 years.