QUESTION 3

Assuming, you are a final year undergraduate student at SEGi University. You had an opportunity to attend SEGi enrichment program, a co-curriculam activity beginning of last year organized by your university. The program was conducted by a senior financial planner from Rock Wealth Management Sdn Bhd, the leading financial planner in the country. The speaker, Mr.Goldman Jr, shared an excellent knowledge, provided practical and applicable information. You are impressed and prompted to apply in your life.To begin with, you are determined to apply the financial planning knowlege to provide a better, happier and convenient life style to your beloved mother, a single parent.

You have conducted additional research on the financial planning related matter, read recommend books by Mr.Goldman Jr. and researched on recommended rewarding investment assets in Malaysia. You are confident on your knowledge and investment research findings. You wish to start applying your financial planning activities from your beloved mother. As you planed, you have discussed and explained your plans to her. She aggreed with your plans since she knows you are risk averse, knowledgeable, prudent and honest person.She is convinced with your ideas. Your mom shared the following information with you.

You have lost your father in a road accident, since than your mom remained as single mother. She is 41 years old, working as a Junior officer in a manufacaturing company, drawing RM4,000.00 per month as fixed salary.

She has invested RM25,000 in Fixed deposit scheme at Malayan Banking Berhad, sourced from your fathers life insurance benefit from MAA insurance company, 2011.The fixed deposit offers 3.00% interest on investment per annum. Interest compounded annually. In addition to that, she is also committed to a contractual monthly saving of RM400.00 per month at RHB Commercial Bank since 2015. The bank offers 1.20% interest per annum.

The house you are currently living at the moment is a fully paid and free from encumbrances. The current market value for the house stands RM200,000. For the record, the location is next to a slum area, and very far from your mother working place. The public transport is unreliable. You have noticed several times that your mother going through under pressure, wasted a quality time waiting for public transport services. You wish to introduce some convenience for your beloved mother. You have carefully studied and planned your alternative plans. You manage to obtain an affordable and decent rented apartment in a condusive environment. The newplace is very close to your mother office and having convenient public transport.You will take care of the monthly rental through your part-time work. Your mother is happy and prepared to sell the house and the proceeds from sale of house will be invested on Islamic Equity Mutual fund managed by Kuwait Finane Berhad, a licenced financial organization by the government. The finance company offers a guaranteed returned of 15% per annum, paid quarterly.

You also have discovert some attractive investment plans and discussed schemes with your mother. Your mother have converted fixed deposit Malayan Banking in to one of the unit trust investment product called balance fund which offers a guaranteed returned of 6.5% per annum, paid half yearly. The traditional monthly savings todate withdrawn. The total fund will be invested in to Bank Rakyat, a licenced cooperative bank which offers super investment scheme which intended to motivate investing culture among women above 40 years old. The Bank Rakyat offers 1.5% return p.a compounded yearly.

Your mother will continue to save RM400.00 per month organize by Family and Women welfare ministry. The is specially tailored for single mothers which offers a 3.0% per annum compounding six monthly plus RM5,000 worth per annum special first class medical card usable at all private wing, government hospitals starting from2021. Assusiming today's date is 31 December 2021.

Important hint: All existing accounts closed in 2021 and new accounts also started in 2021. All investments considered as a full one year investment in the year of investment.

a.

Calculate present value of your mother's investment, prior to your financial planning starts.

(8 marks)

b.

Calculate future value of your mother's investment based on your investment advice as at 31 December 2025.

(8 marks)

C

Based on your Total FV of MBB Unit Trust balance fund + Bank Rakyat Super Investment Scheme for Women + Saving plan at Family, Women and Welfare ministry + Kuwait Finance Berhad,compute present value of your mother's future value of all investment assets that you have initiated based of 7.50% discount rate. Provide justification on your financial planning effort.

(4 marks)

(Total 20 marks)