Question
`Option #1: Budgeting and Retirement Forecast for High Net Worth Client You have been tasked with creating a capital budget, retirement forecast, and presentation for
`Option #1: Budgeting and Retirement Forecast for 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
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