FNCE 627-Personal Financial Planing

You have been referred to two prospective clients, Alberto and Donna Terroni, who would like your assistance in planning their retirement. During your initial meeting, Alberto and Donna admit they haven't thought about retirement, as they have been preoccupied with raising their children and dealing with current expenses. They are somewhat apprehensive about retirement and how they will cope with all the changes it will bring. Alberto is 45 years of age and Donna is 40 and they have 2 children aged 12 and

1. Both clients are salaried employees: Alberto is an account representative and has a pre-tax annualincome of $60,000 (approximately $37,000 after-tax); Donna is a nurse and earns a pre-tax annual incomeof $50,000 (approximately $31,000 aftertax). Both their positions are stable and they feel confident about their job security. They would both like to retire when Alberto reaches age 60; however, they are prepared to continue working until he is 65 if this will ensure they can maintain their current standard of living during retirement. Preserving their present lifestyle is one of their main objectives. Alberto and Donna both love golf and they can envision playing at least twice a week when they retire. Alberto also enjoys carpentry and has set up a makeshift workshop in his garage. Once he retires, he would like to start a part- time business making and refinishing furniture. This could generate between $10,000 and $20,000 of additional income each year. Donna's retirement goals are to return to school and to travel with Alberto. She hopes they will be able to take at least two trips a year with a combined expense of between $5,000 and $8,000. Alberto and Donna would like to stay in their present home for as long as they can maintain it. Also, they cannot see themselves moving too far away from their friends and family. When asked about their major financial goals beyond retirement, they inform you that funding their children's post- secondary education is their highest priority. They would like to pay off their mortgage as soon as possible; however, they want to first pay down their personal line of credit which they borrowed against to pay for home improvements immediately after moving into their house last year. The other major expense they incur is an annual family vacation to Florida that costs approximately $4,000. The Terronis also advise you that Donna's parents will likely move in with them within a year as their deteriorating health requires additional home care. Her parents' only source of income is government pensions.

As part of gathering background data in your meeting with Alberto and Donna Terroni, you are able to produce two financial statements as at December 31, of Last Year: a Statement of Financial Position and a Statement of Cash Flow.

Statement of Cash Flow for Alberto and Donna Terroni as at December 31, of Last Year (Image attached)

Required: Attempt the following questions as they relate to the case above;

1. Determine Alberto and Donna Teroni networth (combined) and illustrate, using scenario analysis howthey might increase their Use the Desjadin template to determine the networth.
2. Calculate their current ratio, liquidity ratio, debt-to-asset ratio and savings ratio and discuss how theseratios affect their individual financial goals post

1. Using the six main components of financial plan discuss a comprehensive combined financial plan forthe financial goals highlighted from the case pertaining to Alberto and Donna Teroni using information provided in the case as above.