Jean and Bean have been married for four years now. They are expecting a baby soon and have plans to have another when the first child reaches 4 years of age. They currently operate a small online business selling fresh fruits and vegetables. Although they have operated as an informal business from their home for the last three years, their business is presently doing quite well. After some deliberation, they have agreed to make their business formal. Jean and Bean have approached you as a management consultant to assist and advise them in a few areas: business operational and financial issues; an appropriate form of business organisation based on the current business condition; and some personal finance issues.

Required:

1) Jean and Bean are thinking of taking a loan to support the expansion of their business. Jean estimates that a loan amounting to $50,000 is required for the expansion. She has asked for some guidance on the loan amortization. Prepare an amortization schedule for a $50,000 loan to be repaid in equal instalments at the end of each of the next 3 years. Use an interest rate of 10% compounded annually.

2) After analysing the business accounts, Jean is interested to invest some of the excess cash held by the business into financial products as she has learnt that such decisions can increase profitable opportunities for the business. As she is cautious about liquidity issues, she has asked you for some advice on low risk investments that provide fixed returns. The following details are available on $100 bonds: - A $100 bond with a coupon rate of 8% per annum and is due to mature in four years' time. The next interest payment is due in one year's time. Similar bonds have a yield to maturity of 10%. Calculate for Jean the expected purchase price of the bond at today's date. In such a case indicate whether the bond can be purchased at a discount, premium or at par.

3) Finally, Jean has also requested that you assist Bean and her to do some personal finance for their retirement pot. Jean and Bean are both 35 years of age and have just started a joint bank account into which they plan to save a yearly amount of $6,000 towards their retirement. At each year end they wish to invest this savings into an investment brokerage account that expects to pay an annual rate of return of 11%. Compute for Jean and Bean the amount of savings they can accumulate when they reach 60 years of age. In your opinion, do you think this retirement plan would be sufficient for Jean & Bean? Are other financial plans necessary as well? Discuss your opinion.