Peter (29) and Penny (29) Mitchell were married three years ago. They both graduated from Mount Royal University. Penny has been the manager for a restaurant since graduation, and she currently earns $64,450 dollars per year ($53,200 after taxes). Peter works as an aeronautical engineer earning $68,250 per year ($50,900 after taxes). Both Peter and Penny have extended health benefits and long-term disability benefits through work. They each have 1 times their salary in group life insurance. The Mitchel currently rent a 3-bedroom home in the Silver Springs neighborhood in North West Calgary. They pay $2,200 per month in rent and $535 per month in utilities ($130 for cell phones, $100 for heat (gas), $85 for electricity, $145 for TV and internet, and $75 for water, garbage and sewer).

Peter and Penny have one child; a 14-month-old daughter named Amelia. Penny recently returned to work following a year of leave. They plan on having another child, ideally in about 18 months. Before their second child is born, they want to purchase a home and ensure that Penny can take a year of leave after the child is born.

They have done some research to see what home prices are. They like the area they live in and to get the type of home they want they expect to spend about $400,000. They plan on paying $40,000 for a down payment. Penny was given $20,000 as a wedding gift from her parents to be used as a down payment on a home. Penny put this money in a high interest savings account and has been adding $200 per month to the account over the past three years. The balance is currently $30,000. Peter has been putting money into an RRSP. Life has been hectic with the baby and Penny returning to work, so they have been putting off the work necessary to search for a home, buy the home and then move. They plan on doing this at the end of the year.

Buying a home is a big step. Peter and Penny feel they need to have better control over the financial lives before they take this step. They know they both have good jobs with decent incomes, yet they are frustrated as they have too much debt. While they believe they have been doing a good job saving money they cant seem to get their credit cards paid off. They also have a car loan and student loans. It seems like they will never be free of debt payments!

They recently sat down and made a list of some of their short to medium term financial goals.

1.Buy a home within a year. 2. Have a second child with Penny able to take a year of maternity/parental leave following the birth of the child.

3. Stop using credit and get their debts (other than the mortgage) paid off. Peters parents struggled with debt all their lives and he doesnt want to be in the same position. They want to become debt free and stay that way. 4.To remain debt free, they will have to save for future vehicle purchases 5. They dont want their children to have the student loans they have. They would like to be able to pay for 4 years of university tuition and fees for each child.

Peter and Penny are currently busy with work, Amelia and activities outside work. They dont have the time to figure out what they need to do to achieve their goals, so they have decided to seek out a financial planner. To get started their financial planner asked them to provide some information on their financial goals and their current financial situation.

Penny has a student loan with a balance $12,400. She pays $190 per month and the interest rate is 7%. Peter has student loan with a balance of $29,000. He currently pays $500 per month and the interest rate is 6.5%. They each have a credit card. Pennys has a balance of $3,200, she is paying $100 per month and the interest rate is 19.99%. Peters has a balance of $5,300. He is paying $125 per month and the interest rate is 11.99%. They have a car loan with a balance of $9,700. They pay $469 per month and the interest rate is 1%.

The Mitchells have never really tracked how they spend their money. They estimate their current monthly expenses include: groceries and household $650, clothes $300, haircuts and personal $150, medical/dental not covered by insurance $50, entertainment and eating out $400, health club membership and sports fees $100, hobbies $100, gifts $200, charity $50, travel $350, auto insurance $185, auto maintenance $100, auto fuel and oil changes $350, miscellaneous auto $25, and finally $400 in childcare.

Penny is part of a Defined Benefit Pension Plan through her employer. She contributes 10% of her gross pay to her defined benefit pension plan. The current commuted value of Pennys pension is $42,800.

Peters employer has a Defined Contribution Pension Plan. Peter contributes 5% of his gross pay and his employer matches his contributions. The current balance in the plan is $16,500.

Peter also has an RRSP account, and he contributes $400 per month to the plan. The current balance in his RRSP is $25,000

Penny and Peter each have a car. Since they both work and have to get Amelia to and from childcare they need to have two vehicles. Penny drives a 2019 Honda Accord valued at perhaps $25,000. Penny worries about safety and would like to replace the vehicle when it reaches about 150,000 kilometers which they estimate will be in about 5 years. They figure they will buy a slightly used vehicle and will spend about $28,000 in todays dollars. Based on some research they figure their current vehicle will have a trade-in value of about $8,000 (in todays dollars).

Peter drives a Mazda 3. He figures the car will last another 4 years and at that time he will buy a used vehicle for about $15,000 (todays dollars). He doesnt expect to get any trade-in value for his car.

Penny recently came off a year of leave. They had saved money in advance to make up for the reduced income that Penny had. They had fewer expenses as Penny was not commuting to work and she had more time to prepare meals resulting in lower overall food/eating out expenses. In addition, since Amelia was a baby they spent less on travel. They were able to get by with $10,000 they had saved. They want to have another $10,000 in savings when they have their next child.

While they are a long way from retirement Peter and Penny have talked about what life in retirement could look like. They think they would like to travel quite a bit, spend time with grandchildren they hope to have, stay active enjoying outdoor activities such as hiking, biking, and cross-country skiing in the winter. They expect to be mortgage free by the time they retire so the money they spend on their mortgage will go toward their travel and leisure activities. Therefore, they estimate their expenses in retirement will be around $67,700 in todays dollars. They want to retire at age 60. Penny will be able to retire with a full pension (estimated to start at $63,900 per year in future dollars or $30,100 in todays dollars and increasing at 60% of inflation). While they are going to retire at age 60 they dont plan on starting CPP benefits until they are 65 so they dont have to take a reduced amount.

8) Revaluate and Revise as necessary

a) Provide recommendations on the revaluation process.

9) Appendices

d) Future Budget

e) Future GDS and TDS calculations

f) Retirement Calculations

g) Investment Calculations

h) Insurance Calculations

10) References

Can you please solve 8 and 9th part