Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please help me to solve these parts. I know the answer but I want only solution Brad and Becky are both 31, and expecting their

Please help me to solve these parts. I know the answer but I want only solution

Brad and Becky are both 31, and expecting their first baby, which has led them to consider their financial situation, such as the financial implications if one of them died or became sick or injured and could no longer work.

They are both in careers they enjoy and each earn $60,000 gross salary.

Brads monthly take home pay is $4,000

Beckys monthly take home pay is $3,200

Their financial statements are as follows.

image text in transcribed

Match the correct answer to the following questions.

  • Question Correct Match Selected Match

    Based on their cash flow statement, what is the minimum disposable income they need to make ends meet, without changing their lifestyle?

    J.

    6600

    J.

    6600

    Becky's LTD plan pays 60% of her gross income. What LTD insurance benefit can she expect on a tax free basis?

    B.

    3000

    B.

    3000

    If Becky's LTD paid her a $4,000 a month taxable benefit, how much monthly income would this provide her on an after tax basis?

    C.

    3390

    C.

    3390

    Brad has no disability insurance coverage from his work. If Brad can qualify for personal DI coverage of 90% of his after tax income, what amount would this be?

    D.

    3680

    D.

    3680

    If Brad and Becky wanted to each have enough life insurance on themselves to provide a $60,000 income to the family indefinitely, and assuming a long term annual real rate of return of 2.2% on the capital, how much life insurance would they each need? (nearest thousand)

    P.

    2,727,000

    P.

    2,727,000

    How much life insurance would they need if they assumed that providing 25 years of $60,000 income was enough, and that they could be sure of a 2.2% annual real rate of return after tax, on the capital? (nearest thousand)

    L.

    1,144,000

    L.

    1,144,000

Cash Flow After tax income Balance Sheet Assets 7,200 House 680,000 20,000 Mortgage 3% int 2,900 Brad's RRSP 540 800 900 Car loan 4% int Car ins and exp 2 cars Groceries Recreation RRSPs Brad TFSAs Other living Brad's TFSA Becky's TFSA Brad's car Becky's car Total Assets 12,000 15,000 32,000 12,000 771,000 200 400 200 1,260 Liabilities Brad's car loan Mortgage Total Liabilities Net Cash Flow 0 26,000 520,000 546,000 Net Worth 225,000 Simplified Marginal Tax Table Begining of End of Tax at start Marginal range range of range rate to 12,000 096 12,000 to 20,000 15% 20,000 to 48,000 1,200 2296 48,000 to 95,000 7,360 30% 95,000 to 148,000 21,460 40% 148,000 to 210,000 42,660 45% 210,000 above 70,560 50% + Cash Flow After tax income Balance Sheet Assets 7,200 House 680,000 20,000 Mortgage 3% int 2,900 Brad's RRSP 540 800 900 Car loan 4% int Car ins and exp 2 cars Groceries Recreation RRSPs Brad TFSAs Other living Brad's TFSA Becky's TFSA Brad's car Becky's car Total Assets 12,000 15,000 32,000 12,000 771,000 200 400 200 1,260 Liabilities Brad's car loan Mortgage Total Liabilities Net Cash Flow 0 26,000 520,000 546,000 Net Worth 225,000 Simplified Marginal Tax Table Begining of End of Tax at start Marginal range range of range rate to 12,000 096 12,000 to 20,000 15% 20,000 to 48,000 1,200 2296 48,000 to 95,000 7,360 30% 95,000 to 148,000 21,460 40% 148,000 to 210,000 42,660 45% 210,000 above 70,560 50% +

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

Cases in Financial Reporting

Authors: Michael J. Sandretto

1st edition

538476796, 978-0538476799

More Books

Students also viewed these Finance questions

Question

Discuss the Rights issue procedure in detail.

Answered: 1 week ago

Question

Discuss the Rights issue procedure in detail.

Answered: 1 week ago

Question

Explain the procedure for valuation of shares.

Answered: 1 week ago

Question

Which months of this year 5 Mondays ?

Answered: 1 week ago

Question

Define Leap year?

Answered: 1 week ago