Based on Brad's case could you answer all the things in yellow? It would be greatly appreciated and I will give a big thumbs up

PART 1: BRAD BROOXS-A Continuing Case Your childhood friend, Brad Brooks, has asked you to help him gain control of his per- sonal financos. Single and 30 years old, Brad is employed as a salosporson for a technol- ogy company. His annual salary is $48,000. He claims no exemptions (he enjoys the big refund check in May), and after Social Security, Medicare, and federal, state, and local income taxes, his monthly disposable Income is $2,743. Brad has recently moved from his comfortable two-bedroom apartment with rent of $600 per month to a condo that ronts for $1,000 per month. The condo is in a plush property owner's association with two golf coursos, a lake, and an activity center. You review his other monthly expenses and find the following: Rentor's Insurance $20 Car payment (balance on car loan $10,000; market value of car $11,000) 500 Utilitios (gas, olectric, Internet) 200 Smartphone 250 Miscellaneous expenses 50 Grocerios 200 Clothes 100 Car exponsos (gas, insurance, maintenanco) 250 Entertainment (dining out, golf, wookend ips) 400 Brad is surprised at how much monoy ho spends on clothes and entertainment. He uses his credit cards for these purchases (the balance is $8,000 and climbing) and has little trouble making the required monthly payments. Ho would, however, like to see the bal- anco go down and eventually pay it off completely. Brad's other goal is to save $4,000 a year so that he can retire 25 years from now. Brad currently has about $4,000 in his checking account and $200 in his savings account (tho balance necessary to roceive no feo chocking). He has furniture valuod at $1,500 and owns $1,300 of toch stocks, which he believes have tho potontial to make him rich. Turn to the workshoets at the end of this chapter to continue this case. Part 2: Brad Brooks-A Continuing Case Brad Brooks is pleased with your assistance in preparing his personal financial state- ments and your suggestions for improving his personal financial situation. He has called you for additional guidance. First, he wants to know what factors he should consider whon solocting a bank and brokerage firm. He is mostly interested in financial institu- tions that will assist him in making Investment and money management decisions. He finds savings accounts boring and has no dosiro to have one because the interest rato is so low Brad is also concerned about his liquidity. His credit card (with a $35 annual fee and 18% interest rato) is nearing its credit limit of $10,000, Ho is reluctant to sell his stocks to get cash to pay off part of the credit balance; he thinks that his stock Investment could generato a return of 10% per year over the next few years. He does not want to give up this return to pay off his credit card balance. Go to the worksheets at the end of this chapter to continue this case. PART 3: BRAD BROOKS-A Continuing Case Brad Brooks listened to your advice about reducing the use of his smartphone (which saves him $250 per month) and reducing his entertainment expenses by $200 per month. He still rents the condo for $1,000 per month. However, now Brad has the urge to upgrade his car and housing situations. He interested in purchasing an SUV for $35,000. He still owes $10,000 on his two-year-old sedan (which has 57,000 miles) and has found a buyer who will pay him $15,000 cash. This would enable him to pay off his current car loan (loan balance is presently $10,000 on his existing car) and still havo $5,000 for a down payment on the SUV. He would finance the remaining $30,000 of the purchase price for four years at 8%. Brad would also like to purchaso his condo. He knows that he will enjoy tax advantages with ownership and is eager to reduce his tax burden. Ho can make the purchase with 10% down; the total purchase price is $90,000. A 30-year mortgage is available with a 5% rato. Closing costs due at signing will total $3,100. The property taxes on his condo will be $1,800 por yoor, his Property Owners' Association (POA) fools $70 per month, and his household Insurance will increase by $240 a year if he buys the condo. Turn to the workshoots at the end of this chapter to continue this case. PART 4: BRAD BROOKS-A Continuing Case Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. Rocall that Brad Is 30 years old. He also has a driving record that contains soveral speeding tickets and two accidents (on of which ho caused). He realizes that adding coverage will increase the cost of his insurance. Therefore, he is thinking about switching insurance companies to a more inexpensive carrier. Brad says that he is generally happy with the HMO Insurance plan he has through the technology company where he works. However, Brad mentions that he does not par. ticularly like to see his primary care physician each time he requires a consultation with a specialist. He tells you that his company also offers a PPO, but that he did not choose that plan because he knows little about it. Brad is trying to decido between term life Insurance and whole life insurance. He likes whole life insurance, as he believes that the loan feature on that policy will give him an option for meeting his liquidity needs. Go to the worksheets at the end of this chapter to continue this case. X cut AA Copy Paste Format 8 Activate Office to Create and Edit Buy Office or sign in to activate Office it Al B D E G 3 4 Brad Brooks-A Continuing Case Part 1: Tools for Financial Planning Case Questions 1a. Prepare personal financial statements for Brad, including a personal cash flow statement and personal balance sheet Personal Cash Flow Statement Cash Intlows This Month 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Total Cash Inflows Cash Outflows Total Cash Outflows Net Cash Flows Personal Balance Sheet 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 Assets Liquid Assets Cash Checking account Savings account Other liquid assets Total liquid assets Household Assets Home Car Fumiture Other household assets Total household assets Investment Assets Stocks Bonds Mutual Funds Other investments Investment Assets Stocks Bonds Mutual Funds Other investments Total investment assets Total Assets 3 14 15 36 17 18 9 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 Liabilities and Net Worth Current Liabilities Loans Credit card balance Other current liabilities Total current liabilities + Long-Term Liabilities Mortgage Car loan Other long-term liabilities Total long-term liabilities Total Liabilities Net Worth b. Based on these statements, make specific recommendations to Brad as to what he needs to do to achieve his goals of paying off his credit card balance and saving for retirement. 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 c. What additional goals could you recommend to Brad for the short and long term? 2. Consider Brad's goal to retire in 25 years by saving $4,000 per year. a. Based on your analysis of Brad's cash flow and your recommendations, is saving $4,000 per year a realistic goal? If not, what other goal would you advise? 86 87 88 89 90 Brad Brooks, Part 1 Brad Brooks, Part 2 Brad Brooks, Part 3 Format ME A1 A Activate Office to Create and Edit Buy Office or sign in to activate Office if you've already bought it fx B D E G H 2. Consider Brad's goal to retire in 25 years by saving $4,000 per year. a. Based on your analysis of Brad's cash flow and your recommendations, is saving 54,000 per year a realistic goal? If not, what other goal would you advise? b. For Brad to know what his $4.000 per year will accumulate to in 25 years, what additional assumption (or piece of information) must he make (or have)? 84 w 86 87 88 B9 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 c. Assuming that Brad invests the $4,000 per year for 25 years, and achieves a retum of 5% per year, how much will he accumulate in 25 years? (in reality, Brad should not build his savings until he pays off the credit card balance, but the exercise here will help him understand how annual savings can help him achieve his goal.) Future Value of an Annuity Payment per Period Number of Periods Interest Rate per Period Future Value d. Compare the alterative of investing $4.000 every year for 25 years the eams 8 percent instead of 5 percent Future Value of an Annuity Payment per Period Number of Periods Interest Rate per Period Future Value 3. Develop three or four suggestions that could help Brad reduce his income tax exposure Suggestions to Reduce Taxes Pros Cons 126 127 128 129 130 Activate Office to Create and Edit Buy Office or sign in to activate Office if you've already boug 41 A B D H 1 2 3 4 5 3. Develop three or four suggestions that could help Brad reduce his income tax exposure Suggestions to Reduce Taxes Pros Cons 6 7 8 4.1 Brad was presently 40 (instead of 30) years old and had the same financial situation, explain how his goal to retire by age 55 might need to be revised. 5. After you infomed Brad of his negative monthly net cash flow, Brad indicated that he may delay paying his credit card bills for a couple of months to reduce his cash outflows. What is your response to his idea? 9 0 1 2 3 4 -5 6 37 38 19 -0 11 12 13 14 35 36 27 48 9 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 D Brad Brooks, Part 1 Brad Brooks, Part 2 Brad Brooks, Part 3 Brod PART 1: BRAD BROOXS-A Continuing Case Your childhood friend, Brad Brooks, has asked you to help him gain control of his per- sonal financos. Single and 30 years old, Brad is employed as a salosporson for a technol- ogy company. His annual salary is $48,000. He claims no exemptions (he enjoys the big refund check in May), and after Social Security, Medicare, and federal, state, and local income taxes, his monthly disposable Income is $2,743. Brad has recently moved from his comfortable two-bedroom apartment with rent of $600 per month to a condo that ronts for $1,000 per month. The condo is in a plush property owner's association with two golf coursos, a lake, and an activity center. You review his other monthly expenses and find the following: Rentor's Insurance $20 Car payment (balance on car loan $10,000; market value of car $11,000) 500 Utilitios (gas, olectric, Internet) 200 Smartphone 250 Miscellaneous expenses 50 Grocerios 200 Clothes 100 Car exponsos (gas, insurance, maintenanco) 250 Entertainment (dining out, golf, wookend ips) 400 Brad is surprised at how much monoy ho spends on clothes and entertainment. He uses his credit cards for these purchases (the balance is $8,000 and climbing) and has little trouble making the required monthly payments. Ho would, however, like to see the bal- anco go down and eventually pay it off completely. Brad's other goal is to save $4,000 a year so that he can retire 25 years from now. Brad currently has about $4,000 in his checking account and $200 in his savings account (tho balance necessary to roceive no feo chocking). He has furniture valuod at $1,500 and owns $1,300 of toch stocks, which he believes have tho potontial to make him rich. Turn to the workshoets at the end of this chapter to continue this case. Part 2: Brad Brooks-A Continuing Case Brad Brooks is pleased with your assistance in preparing his personal financial state- ments and your suggestions for improving his personal financial situation. He has called you for additional guidance. First, he wants to know what factors he should consider whon solocting a bank and brokerage firm. He is mostly interested in financial institu- tions that will assist him in making Investment and money management decisions. He finds savings accounts boring and has no dosiro to have one because the interest rato is so low Brad is also concerned about his liquidity. His credit card (with a $35 annual fee and 18% interest rato) is nearing its credit limit of $10,000, Ho is reluctant to sell his stocks to get cash to pay off part of the credit balance; he thinks that his stock Investment could generato a return of 10% per year over the next few years. He does not want to give up this return to pay off his credit card balance. Go to the worksheets at the end of this chapter to continue this case. PART 3: BRAD BROOKS-A Continuing Case Brad Brooks listened to your advice about reducing the use of his smartphone (which saves him $250 per month) and reducing his entertainment expenses by $200 per month. He still rents the condo for $1,000 per month. However, now Brad has the urge to upgrade his car and housing situations. He interested in purchasing an SUV for $35,000. He still owes $10,000 on his two-year-old sedan (which has 57,000 miles) and has found a buyer who will pay him $15,000 cash. This would enable him to pay off his current car loan (loan balance is presently $10,000 on his existing car) and still havo $5,000 for a down payment on the SUV. He would finance the remaining $30,000 of the purchase price for four years at 8%. Brad would also like to purchaso his condo. He knows that he will enjoy tax advantages with ownership and is eager to reduce his tax burden. Ho can make the purchase with 10% down; the total purchase price is $90,000. A 30-year mortgage is available with a 5% rato. Closing costs due at signing will total $3,100. The property taxes on his condo will be $1,800 por yoor, his Property Owners' Association (POA) fools $70 per month, and his household Insurance will increase by $240 a year if he buys the condo. Turn to the workshoots at the end of this chapter to continue this case. PART 4: BRAD BROOKS-A Continuing Case Brad tells you about his plans to upgrade his auto insurance. Specifically, he would like to add several types of coverage to his policy, such as uninsured motorist coverage and rental car coverage. Rocall that Brad Is 30 years old. He also has a driving record that contains soveral speeding tickets and two accidents (on of which ho caused). He realizes that adding coverage will increase the cost of his insurance. Therefore, he is thinking about switching insurance companies to a more inexpensive carrier. Brad says that he is generally happy with the HMO Insurance plan he has through the technology company where he works. However, Brad mentions that he does not par. ticularly like to see his primary care physician each time he requires a consultation with a specialist. He tells you that his company also offers a PPO, but that he did not choose that plan because he knows little about it. Brad is trying to decido between term life Insurance and whole life insurance. He likes whole life insurance, as he believes that the loan feature on that policy will give him an option for meeting his liquidity needs. Go to the worksheets at the end of this chapter to continue this case. X cut AA Copy Paste Format 8 Activate Office to Create and Edit Buy Office or sign in to activate Office it Al B D E G 3 4 Brad Brooks-A Continuing Case Part 1: Tools for Financial Planning Case Questions 1a. Prepare personal financial statements for Brad, including a personal cash flow statement and personal balance sheet Personal Cash Flow Statement Cash Intlows This Month 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Total Cash Inflows Cash Outflows Total Cash Outflows Net Cash Flows Personal Balance Sheet 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 Assets Liquid Assets Cash Checking account Savings account Other liquid assets Total liquid assets Household Assets Home Car Fumiture Other household assets Total household assets Investment Assets Stocks Bonds Mutual Funds Other investments Investment Assets Stocks Bonds Mutual Funds Other investments Total investment assets Total Assets 3 14 15 36 17 18 9 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 Liabilities and Net Worth Current Liabilities Loans Credit card balance Other current liabilities Total current liabilities + Long-Term Liabilities Mortgage Car loan Other long-term liabilities Total long-term liabilities Total Liabilities Net Worth b. Based on these statements, make specific recommendations to Brad as to what he needs to do to achieve his goals of paying off his credit card balance and saving for retirement. 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 c. What additional goals could you recommend to Brad for the short and long term? 2. Consider Brad's goal to retire in 25 years by saving $4,000 per year. a. Based on your analysis of Brad's cash flow and your recommendations, is saving $4,000 per year a realistic goal? If not, what other goal would you advise? 86 87 88 89 90 Brad Brooks, Part 1 Brad Brooks, Part 2 Brad Brooks, Part 3 Format ME A1 A Activate Office to Create and Edit Buy Office or sign in to activate Office if you've already bought it fx B D E G H 2. Consider Brad's goal to retire in 25 years by saving $4,000 per year. a. Based on your analysis of Brad's cash flow and your recommendations, is saving 54,000 per year a realistic goal? If not, what other goal would you advise? b. For Brad to know what his $4.000 per year will accumulate to in 25 years, what additional assumption (or piece of information) must he make (or have)? 84 w 86 87 88 B9 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 c. Assuming that Brad invests the $4,000 per year for 25 years, and achieves a retum of 5% per year, how much will he accumulate in 25 years? (in reality, Brad should not build his savings until he pays off the credit card balance, but the exercise here will help him understand how annual savings can help him achieve his goal.) Future Value of an Annuity Payment per Period Number of Periods Interest Rate per Period Future Value d. Compare the alterative of investing $4.000 every year for 25 years the eams 8 percent instead of 5 percent Future Value of an Annuity Payment per Period Number of Periods Interest Rate per Period Future Value 3. Develop three or four suggestions that could help Brad reduce his income tax exposure Suggestions to Reduce Taxes Pros Cons 126 127 128 129 130 Activate Office to Create and Edit Buy Office or sign in to activate Office if you've already boug 41 A B D H 1 2 3 4 5 3. Develop three or four suggestions that could help Brad reduce his income tax exposure Suggestions to Reduce Taxes Pros Cons 6 7 8 4.1 Brad was presently 40 (instead of 30) years old and had the same financial situation, explain how his goal to retire by age 55 might need to be revised. 5. After you infomed Brad of his negative monthly net cash flow, Brad indicated that he may delay paying his credit card bills for a couple of months to reduce his cash outflows. What is your response to his idea? 9 0 1 2 3 4 -5 6 37 38 19 -0 11 12 13 14 35 36 27 48 9 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 D Brad Brooks, Part 1 Brad Brooks, Part 2 Brad Brooks, Part 3 Brod