<ol>Assuming a capital need of $4,215,198, determine whether the Williamses will be able to retire at age 67 with their current annual savings amounts (not adjusted for inflation). For current annual savings, use Michael’s 401(k) plan contribution plus the employer’s match and assume that Michelle saves $4,000 per year from her earnings. Assume that all investment assets (regardless of how they are currently invested) will earn a 9% after-tax rate of return. Consider the checking account, money market account, cash value of life insurance, and coin collection as non-retirement assets and, thus, not a part of this calculation. Do include the CD as a retirement savings asset. What is the FV of their current retirement assets?
If Michael and Michelle include the receipt of Social Security benefits in their retirement planning, could they retire at age 67 without increasing their annual savings, what is the amount of excess funds or underfunding? Assume that at age 67 (in today’s dollars) Michael’s Social Security benefit would be $29,820 and Michelle’s would be $14,910. Use Michael’s salary only.
Assuming a 9.4% after-tax rate of return, calculate the amount needed today to fund the children’s college education. Round your answer to 2 decimal places.
Michael and Michelle wish to refinance their home mortgage. Assume the mortgage balance at the time of rebalancing is $220,063. Assume a 15 year mortgage. What will the payment amount be PITI for the house? Round your answer to 2 decimal places
Using the financial needs approach and assuming the following expenses, what is the minimum amount of life insurance Michelle should have today to protect the family? Round your answer to 2 decimal places.
</ol>■ Final expenses of $19,832
■ Annual childcare costs of $13,496 per year for 10 years
■ College funding for Beau ($62,721) and Elizabeth ($58,202)
■ Mortgage of $225,000
■ Auto loans of $43,000
■ Student loans of $50,500
■ Credit card debt of $550
■ Return on the invested money is 9%
■ The expected inflation rate is 3%
■ Emergency fund need of roughly $23,064 ($30,564 need – $7,500 cash)
6. Frank and Isabelle are thinking of retiring in five years and are considering transferring the deli to Michelle. They believe that such a transfer would be wise, for it would remove the value of the deli from their gross estate. They are wondering what the value of the deli might be today using the capitalized earnings model.Calculate the value of the deli assuming the deli generates earnings before taxes of $150,418 annually and a capitalization rate of 9%. Add in the value of the business real estate.
7.If the Williamses average $2,991 in annual dental and vision care expenses, how much would they save/exclude from taxes by using pre-tax dollars?
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