Abigail Joseph is a 36-year old divorcee residing in U.S. She has two children: age 10 and age 6. Joseph works as the head of treasury at Econet Wireless Corporation. The following information describes the financial environment in U.S. Taxes Flat income tax rate of 25%. Wages, realized capital gains, and interest are taxed as income. Dividends are not taxed. Realized losses may be offset against income and may be carried forward to offset income in future years Exchange and interest rates South African Rands rate: R15.24/ USD$ US risk-free interest rate 1.5% Health insurance Government provides health insurance to all citizens. Retirement accounts (RAs) Contributions are pretax and the annual maximum for this benefit is $ 40,000 per year. Income taxes are only paid on withdrawals. No income tax is payable on the return of the RA. No penalties on withdrawals for education or housing. Josephs current pretax annual compensation is $140,000 and her current annual living expenses are $96,000. Her future salary increases are expected to match any increases in living expenses on a pretax basis. Joseph is in good health, owns her home, and has no debt. Joseph is a disciplined investor, but a recent equity market decline caused her great anxiety. She is worried about her ability to fund her childrens education and her retirement. Joseph meets with her financial advisor, David Hanyire, to review her financial plan. Hanyire notes the following factors: Joseph desires to make annual pretax contributions $ 7,800 to a charity. This contribution is included in her annual living expenses. She plans to prepay her childrens future education costs at the end of this year. Joseph participates in Econet Wirelesss executive retirement program. At the mandatory retirement age of 65, she will receive a pretax payment of $ 2,000,000 only. Hanyire determines that the prepaid education costs for both children will require a total of $ 50,000, including all taxes. He recommends: that Joseph prepay her childrens future education costs within the next 6-months that Joseph upon retirement purchase a life annuity to fund her retirement, that Joseph will need $ 3,000,000 (pretax) to purchase the annuity at age 65. Joseph agrees with Hanyires recommendation. Additional information South Africa risk-free interest rate is 4.5%

Formulate each of the following constraints of Josephs investment policy statement (IPS): i. liquidity (2) ii. time horizon