Amy has asked what lump-sum would need to be invested today to fund the children's future college costs. She asked to assume each child will begin college at 18 and graduate in four years. Assume current costs are $23,000 per year and are expected to increase 4% per year. Any inherited funds will not be considered for college funding at this time. The Smiths would like you to use the 7% investment return assumption that is referenced under investment data for this goal (attached in photos).

what is your analysis, reccomendations and detailed support. (financial plan)

Children Bradley, age 10, attends Anytown Private Elementary School and is in the fourth grade. Brea, age 5, also attends Anytown Private Elementary School and is in kindergarten on a halfday ichedule. Brea spends Monday through Friday afternoons during the school year at an excellent dsy care center owned and operated by good friends of the coopers. The center aiso offers an academic enrichment program for the children. ! Anytown Private Elementary School provides a 50% tuition discount for enrolled students who are children of faculty and staff members of the school. Blaire, age 2, attends the same day care center as Brea nine hours a day. Monday through Friday, and also benefits from the enrichment program for her age group. The cost of the day care for Brea and Blaire is paid by the couple, but erea is receiving additional instruction in French. The additional cost of $200 per month for $ sara's french class was paid for by AmV's aunt, Belle, who was a strong proponent of children learning foreign languages, until her death. The Coopers were close to Aunt Belle, naming the children with names beginning with the letter " B " as a tribute to her. When she died last October, she bequeathed the following to her great-nieces and great-nephew: - Bradley-Municipal bonds that had an FMV of $50,000 at Aunt Belle's death and a basis to Aunt Belle of $20,000 - Brea-Preferred stocks that had an FMV of $48,000 at Aunt Belle's death and a basis to Aunt Belle of $10,000 - Blaire-A nonqualified, single premium tax-deferred annuity, which Aunt Belle purchased for $10,00020 vears ago and which had an FMV at her death of $40,000 Amy has asked you what lump-sum would need to be invested today to fund the children's future college costs. She asked you to assume each child will begin college at age 18 and graduate in four years. Assume current costs are $23,000 per year and are expected to increase by 4% per year. Any inherited funds will not be considered for college funding at this time. The Coopers would like you to use the 7% investment return assumption that is referenced under Investment Data for this goal. They would also like you to assume all funds will be invested in a Section 529 plan. Grondparents Economic Information The Coopers expect inflation to average 2% annually, both currently and for the long term. They also expect Amy's salary to increase 5% annually, both currently and long term. The net income from Big Joey's for the last three years was $76,000,$59,600, and $57,500, respectively. Sheldon expects net income from Big Joey's to increase at 3.5% annually, both currently and over the long term. Current mortgage rates are 3.5% for 15 years and 4.125% for 30 years. Closing costs would be 3% of the amount financed and would be paid at closing from separate funds (not rolled into the mortgage). Investment Data NOTE: In the investment holdings tables in this section, the X with a line above represents the average return for the holding. The Coopers indicate their tolerance for investment risk is a 7 on a scale of 1 to 10 ( 1 being the most risk averse). They expect to be more conservative as they get closer to retirement. For all of their financial planning goals, they are comfortable assuming a projected annual return of 7% on their investments and retirement assets. The risk-free rate is 2.5%, and the market rate of return (benchmark return) is 12.41%. 5 Stocks Mutual Funds Amy's Section 403(b) Plan (TSA) Amy has asked you to comment on her TSA plan performance. Specifically, she wants to know how well the fund is performing relative to what is expected using CAPM. Also, she is concerned that the fund may not be performing well enough to justify the portfolio's risk, as measured by beta. Therefore, she wants you to analyze the portfolio's risk versus the overall market. She also has asked what maximum contribution she can make to the plan for 2023. Sheldon's IRA 6 Sheldon wants to make a $4,000 contribution to his IRA. He wants to purchase Stock G using the entire contribution. The stock has an expected rate of return of 8% over the next five years. He would like to know the expected rate of return of the new portfolio, including this stock (Stock G ), if his existing holdings continue to perform at a rate equal to their average rate of return. Also, will this new portfolio return exceed the rate of return he wants to assume for planning purposes, as stated in the Investment Data section of the case? Clothing Rental property expenses (Schedule E) Total ordinary living expenses Total outflows Net cash flow surplus $S5,00022,000144,311 S 150,171 S 6,611 STATEMENT OF FINANCIAL. FOSITION Sheldon and Amy Cooper January1,2023 Assets Cash/cash equivaleat Checking account Savings account Total cash/cash equivalent Invested assets Certificate of deposit Savings bonds Murual funds Individual stocks Amy's inherited IR.A Amy's Section 403(b) Sheldon's IRA Big Jocy's Rental property Life insurance cash value Total invested assets Personal use assets Primary residence (incleding land) Jewelry Jeep Ginnd Cherokee Bascball card cellection Total personal use assets Total assets Liabilities Credit cards Auto lasn Home mortgage Total liabilities Net worth Total liabilities and net worth Replacement value of house is 5115,000 \begin{tabular}{l|r|} JT & 5,000 \\ JT & 5,000 \\ JT & 13,600 \\ JT & 18,800 \\ Amy & 100,000 \\ Amy & 31,331 \\ Sheldon & 27,942 \\ JT & 138,000 \\ Amy & 84,000 \\ Sheldan & 21,250 \\ & 453,923 \end{tabular} \begin{tabular}{|c|c|c|} \hline & 5 & 125,000 \\ \hline Amy & & 8,000 \\ \hline & & 24,000 \\ \hline Sheldon & & 2,400 \\ \hline & 5 & 159,400 \\ \hline \end{tabular} 5620,823 8,200 11,000 98,836 S 118,036 5502,787 S 620,823 11