I I You are an independent financial planner working in Ontario. It is March 2021 and you just finished your meeting with Greg Treetop and, after reviewing all of your notes, compiled the following summary: Background Information Client Name: Mr. Greg Treetop Marital Status: In a relationship, living separately at this time. Age: 43 Address: 1825 Street Rd. Toronto, ON Next of Kin: Dan and Wilma Treetop - Parents aged 70 and 68 respectively. Olivia Bush - Girlfriend Employment Information Greg works as an arborist and is paid an annual salary of $65,000, gross. Based on his most recent tax return he has the following deductions: CPP $3,166; El $856; Federal tax $10,630, Provincial Tax $4,096. Greg expects his average income to remain the same until he retires. His employer provides extended health care benefits but no pension. He has to pay an annual fee for his arborist license that costs $1,000, which his employer pays for. Olivia is a naturopath and is self-employed. Her earnings fluctuate, but on average she earns $81,000, net. Since she is self-employed she has no benefits. She contributes to a TFSA regularly in the amount of $6,000 per annum. She has maximized all of her available contribution room. Personal Expenses Greg's monthly rent is $2,450. He also pays $120 a month for hydro. Olivia owns a condo valued at $495,000 with a mortgage of $183,200 remaining. Her monthly mortgage payments are $1,450, condo fees are $585, hydro is $100 a month, insurance is $500 a year and property taxes are $2,100 a year. He and Olivia are looking to buy a property together in the next year. They have been saving for a down payment and have jointly accumulated $145,000 in a non-registered account. The house will cost $725,000 and the property taxes will be $2,850 a year. They will get a rate of 1.99% on a 5 year fixed closed mortgage with a 20 year amortization and will make monthly payments. Other costs related to the property will include: utilities such as gas, hydro, water of $300 a month; property insurance costs $500 a year, and lastly property maintenance is $120 a month. *Ignore taxes and closing costs.* Once they move in together Olivia will rent out her condo and will get $2,200 a month for it. The tenant will be responsible for their own hydro bill. Car expenses for Greg (which include gas, oil, licenses etc.) average $220 per month. On top of that car insurance costs $100 a month. Olivia takes public transit and uses Ubers. This costs her $225 a month. The car is worth $5,000. I I You are an independent financial planner working in Ontario. It is March 2021 and you just finished your meeting with Greg Treetop and, after reviewing all of your notes, compiled the following summary: Background Information Client Name: Mr. Greg Treetop Marital Status: In a relationship, living separately at this time. Age: 43 Address: 1825 Street Rd. Toronto, ON Next of Kin: Dan and Wilma Treetop - Parents aged 70 and 68 respectively. Olivia Bush - Girlfriend Employment Information Greg works as an arborist and is paid an annual salary of $65,000, gross. Based on his most recent tax return he has the following deductions: CPP $3,166; El $856; Federal tax $10,630, Provincial Tax $4,096. Greg expects his average income to remain the same until he retires. His employer provides extended health care benefits but no pension. He has to pay an annual fee for his arborist license that costs $1,000, which his employer pays for. Olivia is a naturopath and is self-employed. Her earnings fluctuate, but on average she earns $81,000, net. Since she is self-employed she has no benefits. She contributes to a TFSA regularly in the amount of $6,000 per annum. She has maximized all of her available contribution room. Personal Expenses Greg's monthly rent is $2,450. He also pays $120 a month for hydro. Olivia owns a condo valued at $495,000 with a mortgage of $183,200 remaining. Her monthly mortgage payments are $1,450, condo fees are $585, hydro is $100 a month, insurance is $500 a year and property taxes are $2,100 a year. He and Olivia are looking to buy a property together in the next year. They have been saving for a down payment and have jointly accumulated $145,000 in a non-registered account. The house will cost $725,000 and the property taxes will be $2,850 a year. They will get a rate of 1.99% on a 5 year fixed closed mortgage with a 20 year amortization and will make monthly payments. Other costs related to the property will include: utilities such as gas, hydro, water of $300 a month; property insurance costs $500 a year, and lastly property maintenance is $120 a month. *Ignore taxes and closing costs.* Once they move in together Olivia will rent out her condo and will get $2,200 a month for it. The tenant will be responsible for their own hydro bill. Car expenses for Greg (which include gas, oil, licenses etc.) average $220 per month. On top of that car insurance costs $100 a month. Olivia takes public transit and uses Ubers. This costs her $225 a month. The car is worth $5,000. Other Olivia is considering getting a car since the house they will be moving into is outside of the city. She found a car that will cost $45,000. The dealership would charge 1.99 % APR, compounded monthly with monthly payments at the beginning of the month on the loan for a 3 year term. She is wondering if taking on a new debt makes sense with the additional costs associated with owing a new home. The insurance on the car will be $2,100 a year and other regular costs such as gas, maintenance, licenses and so on will be $325 a month. Debts Greg owes $8,000 on his Visa and he makes the minimum payments every month ($100 per month). The interest rate on the Visa card debt is 18.5%. Greg also has a line of credit he used to surprise Olivia with an extravagant naturopathic excursion and course to get a new certification she has been wanting to pursue. The balance owing on the line of credit is $16,000. He makes monthly payments of $150. The interest rate is 3.25%. Assumptions Greg and Olivia are in good health and expect to live until age 92 and 96 respectively. Inflation is 2% Greg and Olivia plan to live in the new home through retirement. REQUIRED 1. Create a Cash Flow statement for Greg and Olivia separately. Discuss the net cash flow figure. (20 marks) 2. Create a Net Worth Statement for Greg and Olivia separately. Discuss the net worth figure. (15 marks) 3. For Greg only, calculate each financial ratio noted in the lectures and explain what they mean. (15 marks) 4. Provide 3 financial planning suggestions for Greg that you think are important based on the information presented in the case. (6 marks) 5. Create a budget and new Net Worth Statement for Greg and Olivia for when they move into the new house and combine their finances. (15 marks) 6. Recalculate the following ratios for them as a family unit and explain what they mean and how and why they changed: a. Liquidity ratio (4 marks) b. Investment assets to total assets ratio (4 marks) c. Consumer debt ratio (4 marks) 7. Discuss the implications of the following in terms of Family Law assuming Greg and Olivia are common law: a. Olivia maintaining the condo and renting it out. (4 marks) b. Greg and Olivia moving in together into a new house. (5 marks) c. Olivia's inheritance when they combine their finances. (2 marks) d. How would the above change if they were married? (3 marks) 8. Calculate Greg's 2021 TFSA contribution room. (3 marks)