Option #$1$: Budgeting and Retirement Forecast for a High Net Worth Client

You have been tasked with creating a capital budget, retirement forecast, and presentation for a high net worth client. The following information is provided:

Married couple$-$ $$250,000$ per year income from W$-2$ form.

Ages $45$ and $42,$ no children.

In addition to the W$-2$ income they own a business $($S$-$Corporation$)$ and typically see about $$100,000$ in dividends each year $($total between the two of them$).$

Current retirement savings $=$ $$1,500,000.$

They contribute the maximum possible to a Simple IRA each year.

They would like to retire at $50$ with $$2,500,000$ in their retirement account.

They will also be continuing ownership in the S$-$corp and plan to continue to receive the dividends after retirement.

They are looking at the following options from a capital budget perspective $($NOTE: they can only choose one$)$:

Purchase a rental property for $$500,000.$ It will create cash flow of $$60,000$ per year in rent, which will increase by $4\%$ per year over the next $10$ years. They then anticipate being able to sell the property for $$750,000.$

Invest $$500,000$ in a $10$ year $10\%$ coupon bond, paying out dividends semi$-$annually.

Submit an Excel workbook with the following worksheets:

Capital Budget calculations for both options.

Retirement forecast based on the above information $($NOTE: do a separate forecast for each of the possible capital expenditure options$).$

Summary worksheet