Restructuring: The Fred and Wilma Case Fred and Wilma were enjoying life in their late fifties. The kids were married and off the payroll. They both had excellent jobs in the same company, and they were each making over $100,000 per year. They were in good health and were enjoying travelling the world, and the future was looking bright. They were on a three-week tour of Ireland, staying in castles and eating in fine restaurants when they received an e-mail notifying them that the company they worked for had been sold to a competitor and that their department had been deemed redundant and was eliminated so they were both out of a job. They had some money put away for retirement but had planned on working until they were 65 years old, at which point they would have had decent pensions from their employer and, combined with their government pensions, they would be in good shape. Now they were having trouble finding good jobs as not many companies were interested in hiring older employees and paying them what Fred and Wilma felt they were worth. The couple was finding it hard to deal with both financially and personally. After 6 months, their compensation and benefits expired from their former company, and they both swallowed their pride and accepted significantly lower paying jobs. Unfortunately, the lower income has put a strain on their finances and they have come to you for help. The following information has been verified with the couple and the credit bureau: (a) The couple owns a condo valued at $500,000 with a mortgage of $430,000, 24 years remaining in the amortization, interest rate of 4.7% locked in for 4 years and monthly payments of $2,493. The annual taxes are $2,520, the heating cost is $80/month and the condo fees are $300/month. The electricity costs $120 per month and their home insurance is $610 per year. (b) The couple has a ski chalet (recreational home) valued at $340,000 with an open mortgage of $50,000, 15 years remaining in the amortization, interest rate of 6.2% and monthly payments of $428/month. The property taxes are $2,400 per year and the heating costs are $100 per month. The electricity costs $180 per month and the home insurance is $960 per year. (c) The couple has a 4-year-old car worth $15,000 and a loan for the car with a balance of $10,000, 8.9% interest, 3 years remaining in the amortization/term and a monthly payment of $318. (d) Line of Credit: Limit = $25,000, Balance = $25,000, Interest Rate = 5%. (e) Everyday Bank MasterCard: Limit = $20,000, Balance = $15,000, Rate = 18%. (f) TD Bank Visa: Limit = $10,000, Balance = $8,500, Rate = 21%. (g) Shell Oil Card: Limit = $3,000, Balance = $2,500, Rate = 21%. (h) No collection activity on file. The couple has saved about $50,000 combined in RRSPs, and they have locked in pensions from their last employer; however, they would prefer not to cash in their RRSP, and they cant touch the locked-in accounts until they are 65. The current rate for first Mortgages is 5%, and the current rate for second mortgages is 6%; the current rate on a vacation home loan is 6%, and all three have a maximum 25-year amortization and cost about $1,500 to obtain (Legal fees, appraisals, etc.). The current rate for car loans is 9%. Freds new position is the assistant manager of a small manufacturing firm with an annual salary of $72,000 and Wilma is working as an administrative assistant at a Dental Clinic with an annual salary of $57,600. 1. Calculate the couples current TDSR. (3 Marks) 2. Assuming you will help Fed and Wilma, what is your recommendation? (4 Marks) 3. Calculate the couples new TDSR resulting from your recommendation. (3 Marks)