Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In June of 2 0 1 5 , Hank bootstrapped a technology - based business in the garage of their home in West Vancouver. He

In June of 2015, Hank bootstrapped a technology-based business in the garage of their home in
West Vancouver. He wanted to work with other socially conscious entrepreneurs. They have
become increasingly successful; last year's revenues were about $5 million. They expect to do
better than that next year. Peggy works 10 hours a week in the business and takes a salary of
$110,000 annually. They each take dividends from the corporate account of about $25,000
year.
Their accountant has instructed them to maximize their contributions to their RRSP's which are
now: Peggy: $200,000 Hank: $230,000. They also have a joint investment account with us
valued at $5,920,000. They have a corporate account (Hill Holdings LT) that has only cash in it:
$1,500,000 CAD and $600,000 USD. Many clients pay in US funds, and their accountant has
instructed them to keep it in that currency. They purchased a lot in Hawaii valued currently at
$400,000 USD and want to build on it in the next three or four years. In the meantime, they are
strategizing ways to get a townhouse at Whistler.
They are planning to sell the business later this year. With the growth trajectory they currently
have, the calibre of the staff they currently employ and projections for future revenue, Hill has
had an estimate from a CPA friend of his that the business (and its intellectual property) is $11
million USD.
Additional information:
They are paying a mortgage of a $850,000 CAD home with a remaining balance of $450,000 and
monthly payments of $3,578
They both have student loans: Peggy $12,000 CAD and Hank $15,000
They own two vehicles: VW Tiguan 2021 $32,500 CAD and BMW 325i 2022$51,000 CAD
Calculate:
Net Worth
Cash Flow
it is valid to make assumptions that would make sense
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Business Finance

Authors: Brian Watts

8th Edition

0712110720, 978-0712110723

More Books

Students also viewed these Finance questions

Question

19. Explain why the bid-ask spread is a transaction cost.

Answered: 1 week ago

Question

DO CONTRACT WORKERSGETTHE SAME ENTITLEMENTS AS EMPLOYEES?

Answered: 1 week ago

Question

2.5 Describe the purpose of employment equity programs.

Answered: 1 week ago