Glyn Williams is a successful entrepreneur from Wales, and hc is thinking about retiring in one year. the past 15 years or so, hc has started and sold many small businesses. At agc 40, Williams is now thinking alut ending his entrepreneurial career to pursue a more comfortable lifestyle. He expects to earn 2.4 million this year from profits and from the salc Of small business. return and profit are taxed at a flat has always managed his own investments, and, a result, his growth equity portfolio has not had as much SLICCCSS as his businesses. His Worst performing security is D&D, an investment he first made about years ago. Instead of liquidating his position in response to extended decreases in D&D' share price, Williams acquired additional shares in order to his average cost share. Hc totally avoids securities because his parents experienced serious losses in the that industry in the 1980s. The rest Of his growth equity portfolio has performed adequately. He also has commercial real estate investments that are expected to be cash-Row neutral this year (cash inflows outflows). assets are shown in Exhibit Exhibit I : Glyn personal Assets Cash savings Growth equity portfolio Commercial real estate investments dividends reinvested Williams expects the annual after-tax interest income on his cash savings to be 60,000 at the end of the year. He plans to pay cash for a E2.8 million oceanfront home when he receives the cash from the sale of his last business. Because Williams hasl forgotten thc difficulties he experienced growing up in poverty, hc has started the Glyn Williams Children's Foundation to help the troubled youth in the community Where he was raised. He plans to gift all of his commercial real estate investments to the foundation upon his retirement. During retirement, Williams plans to volunteer the majority of his time to the foundation and does not expect to receive any compensation from other sources. Williams recently divorced his wife of 20 years, and they have twin daughters, age I O, both of whom live with their mother in London. Hc makes monthly child support payments that arc cxptcd to total "80,000 this year. These annual payments will end when his daughters turn 18 years old. Williams's living expenses arc expected to bc 720,000 this year. Williams has stated he wants to plan on chis growing with inflation, though he could spend less if need be. Both living expenses and child support payments will increase at the expected 4% annual inflation rate. All dividends from thc equity portfolio are reinvested in thc portfolio at no cost to Williams. Williams has stated that he wants to maintain the real value of his portfolio during his retirement, and he expects the portfolio to meet his living expenses for his expected 40 years of retirement. Justin Rabcy, CFA, who was recently hired by Williams, expects the after-tax nominal annual return for growth equity to be 8.5%. 1. 2. 3. State all retum objectives in William's investment policy statements (5 points) Calculate the after-tax nominal rate of retum that is required during William's first year of retirement assuming there ae no tax consequences to paying child support or gifting commercial real estate to his foundation. Show your calculations. (8 points) Identify three factors in William's personal situation that increase his ability to take risk and one factor in William's personal situation that decrease his ability to take risk. Detennine whether William's most likely to has below-average, average, or above average ability to take risk. (7 points)