Question
You have commenced work as a certified Financial Planner. Your supervisor has provided the following financial data for a new client Brant Jerome. The client
You have commenced work as a certified Financial Planner. Your supervisor has provided the following financial data for a new client Brant Jerome. The client turned 34 years old today and plans to retire when she turns 67. The client owns a diversified share portfolio which is valued today at $47,000. It is expected that this portfolio will earn (on average) 7% per annum indefinitely. Brant also has a superannuation account with a balance of $78,000 to which he currently contributes $1,000 per month. The superannuation account is expected to continue to earn 8% per annum. At his retirement your client plans to consolidate his financial holdings and purchase a monthly annuity as a pension to fund his planned lifestyle. Brant believes he will need to self-fund his retirement until he reaches the age of 85 at which time he would like to have $120,000 remaining to fund any costs not covered by the age pension. During the pension phase of his retirement Brant will adopt a Balanced investment strategy which will return 5% pa (compounded monthly) on his annuity investment.
(i)What will be the value of Brant's financial assets when he retires at age 67? Present all calculations to support your answer.with all steps and formula use
(ii)What will be the monthly pension amount that Brant will receive on his retirement?Present all calculations to support your answer.(5 marks)
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