You have been referred to two prospective clients, Alberto and Donna Terroni, who would like your assistance in planning their retirement. During your initial meeting, Alberto and Donna admitted they hadnt thought about retirement, as they were preoccupied with raising their children and dealing with current expenses. They are somewhat apprehensive about retirement and how they will cope with all the changes it will bring. Alberto is 45 years of age, and Donna is 40, and they have two children aged 12 and 15. Both clients are salaried employees: Alberto is an account representative and has a pre-tax annual income of $60,000 (approximately $37,000 after-tax); Donna is a nurse and earns a pre-tax annual income of $50,000 (approximately $31,000 aftertax). Both their positions are stable, and they feel confident about their job security. They would both like to retire when Alberto reaches age 60; however, they are prepared to continue working until he is 65 if this will ensure they can maintain their current standard of living during retirement. Preserving their present lifestyle is one of their main objectives. Alberto and Donna both love golf, and they can envision playing at least twice a week when they retire. Alberto also enjoys carpentry and has set up a makeshift workshop in his garage. Once he retires, he would like to start a part-time business making and refinishing furniture. This could generate between $10,000 and $20,000 of additional income each year. Donnas retirement goals are to return to school and travel with Alberto. She hopes they will be able to take at least two trips a year with a combined expense of between $5,000 and $8,000. Alberto and Donna would like to stay in their present home for as long as they can maintain it. Also, they cannot see themselves moving too far away from their friends and family. When asked about their major financial goals beyond retirement, they inform you that funding their childrens post-secondary education is their highest priority. They would like to pay off their mortgage as soon as possible; however, they want first to pay down their personal line of credit, which they borrowed against to pay for home improvements immediately after moving into their house last year. The other major expense they incur is an annual family vacation to Florida that costs approximately $4,000. The Terronis also advise you that Donnas parents will likely move in with them within a year as their deteriorating health requires additional home care. Her parents only source of income is government pensions. As part of gathering background data in your meeting with Alberto and Donna Terroni, you are able to produce two financial statements as of December 31 of Last Year: a Statement of Financial Position and a Statement of Cash Flow. Required: Attempt the following questions as they relate to the case above; a) Determine Alberto and Donna Teroni's networth (combined) and illustrate, using scenario analysis how they might increase their networth. Use the Desjadin template to determine the networth. (25 marks) b) Calculate their current ratio, liquidity ratio, debt-to-asset ratio and savings ratio and discuss how these ratios affect their individual financial goals post retirement. (35 marks) c) Using the six main components of financial plan discuss a comprehensive combined financial plan for the financial goals highlighted from the case pertaining to Alberto and Donna Teroni using the information provided in the case as above. (40 marks)

Statement of Cash Flow for Alberto and Donna Terroni ge at noramhar 21 nf I aet Vaar Statement of Financial Position for Alberto and Donna Terroni for the Year Ended December 31, of Last Year ASSETS / LIABILITIES Liquid Assets: Chequing / savings accounts Money Market Fund Total Liquid Assets Equity in Investments: Guaranteed Investment Certificates Mutual Funds RRSPs Total Equity in Investments Personal Assets: Home Personal Assets Automobile Total Personal Assets TOTAL ASSETS 200,000 45,000 15,000 \\( \\mathbf{2 6 0 , 0 0 0} \\) \\( \\mathbf{3 6 3 , 3 0 0} \\) Liabilities: Mortgage: 5 year term @ 7\\% amortized over 20 years; bi- 165,000 weekly payments Credit cards Personal line of credit Total Liabilities TOTAL NET WORTH 18,000 12,500 65,000 \\( \\mathbf{9 5}, \\mathbf{5 0 0} \\) \\( \\mathbf{9 5 , 5 0 0} \\) 2,800 5,000 7,800 7,800 00,000 45,000 15,000 60,000 63,300 2,900 35,000 202,900 160,400