1. Dominique earned $105,000 in 2018, 5% more than she did in 2017. She is a member of her employers private medical plan and paid $700 in premiums which were deducted directly from her pay. In addition to her employment income, Dominique earned $2,000 in dividends from shares she owns in the Royal Bank. Dominiques employer does not offer a registered pension plan and Dominiques RRSP carry forward room as at the end of 2017 was $72,000. She contributed $8,000 to her RRSP at the end of 2018.

After all expenses, Dominiques cash flow surplus in 2018 was $2,500. Her expenses included $2,210 for dental work and $500 to the Multiple Sclerosis Society of Canada.

a) What was Dominiques RRSP contribution room as at January 1, 2018?

b) What would be Dominiques Federal medical expense tax credit for 2018?

c) What would be Dominiques Federal charitable donations tax credit for 2018?

d) What would be Dominiques 2018 Federal dividend tax credit?

2. Mirai has great difficulty managing her debt. She usually carries a balance on her credit card, has maxed out her $15,000 line of credit and now finds herself in the position of having to borrow to purchase a car.

a) Assume Mirais credit card balance is $2,000. If she doesnt use the card again and only makes the minimum 3% payment every month, how long would it take her to pay off the balance on her card? The interest rate is 21%, compounded daily.

b) Mirais line of credit charges an APR of 7%, compounded monthly. She was charged a $200 service fee to set it up. What is the effective annual cost of her line of credit, assuming full draw down?

3. The Simpsons are first time home buyers. They have negotiated a fixed rate of 3%, compounded semi-annually, on a $325,000 mortgage loan to be amortized over 25 years. The Bank of Canada posted 5 year rate is currently 5.34%. The Simpsons expect that monthly municipal taxes and heating costs will amount to $300 and $150, respectively. Their only other debt is a $10,000 line of credit which they have yet to use. The couples gross combined income is $115,000.

They will make monthly mortgage payments. Note that mortgage lenders assume a minimum (usually 3%) payment on a credit card balance and line of credit balance based on full usage.

a) Keeping in mind the mortgage stress test for new home buyers, what will be the couples TDS ratio? Will they qualify for the mortgage loan?

b) The couple will make a $50,000 down payment on the loan. How much additional interest would they pay over the life of the loan if they add the CMHC mortgage default insurance cost to their mortgage?

c)If the couple opts for an accelerated bi-weekly payment (i.e. a payment every two weeks that equals of the regular monthly payment), what would be their new amortization period?

TABLE A

2018 Combined Federal and Quebec Personal Income Tax Brackets and Tax Rates
2018 Taxable Income	2018 Tax Rates	2018 Taxable Income	2018 Tax Rates
first $43,055	27.53%	over $93,208 up to $104,765	45.71%
over $43,055 up to $46,605	32.53%	over $104,765 up to $144,489	47.46%
over $46,605 up to $86,105	37.12%	over $144,489 up to $205,842	49.97%
over $86,105 up to $93,208	41.12%	over $205,842	53.31%

TABLE B

Tax-Free Savings Account (TFSA) Annual Limits
Year	Annual Limit	Year	Annual Limit
Year started 2009	$5,000	2014	$5,500
2010	$5,000	2015	$10,000
2011	$5,000	2016	$5,500
2012	$5,000	2017	$5,500
2013	$5,500	2018	$5,500

TABLE C

	Time Value of Money Formulas
Simple Interest		I = P x R x T
Future (FV) of a single sum
Future Value of an Annuity or series of payments
Present Value (PV) of a single sum
Present Value of an Annuity or series of payments		or
Time Value: FV = Future value i = Annual interest rate PV = Present value n = Number of time periods PMT = PMT or regular annuity		When compounding is more than once a year, FV = PV (1 + i/m)nm m = Number of compounding periods per year