Financial Planning & Taxation

COURSE TITLE: RISK, INSURANCE AND FINANCIAL PLANNING
COURSE NUMBER: COMM 323-3

SEMESTER: January 2013

INSTRUCTOR: Patrick Barrette
E-MAIL: barrettp@unbc.ca

 
Assignment
 #1
 Financial
 Planning
 &
 Taxation
 (15%)
 
 

 
Chapter
 #
 1,
 Financial
 Planning
 
 
End
 of
 Chapter
 problem
 #1
 
 
“Where
 Does
 all
 the
 Money
 Go?”
 
 (page
 33
 of
 your
 textbook)
 

a. Prepare
 a
 net
 worth
 statement
 for
 this
 couple.
 Analyze
 their
 net
 worth
 position
 and
 
make
 a
 list
 of
 issues
 you
 would
 raise
 in
 a
 discussion
 with
 the
 couple
 if
 you
 were
 a
 
financial
 planner.
 
 

b. Make
 a
 summary
 cash
 flow
 statement
 for
 Jan
 and
 Dave,
 analyze
 their
 cash
 flow
 
situation.
 Do
 any
 expense
 categories
 seem
 to
 be
 missing?
 

c. Evaluate
 this
 couples
 financial
 security,
 how
 well
 prepared
 are
 they
 for
 a
 financial
 
emergency?
 

d. Do
 you
 think
 this
 couple
 should
 be
 saving
 more?
 What
 do
 you
 suggest?
 What
 future
 
difficulties
 do
 you
 foresee
 for
 them
 if
 they
 continue
 as
 present?
 

e. Evaluate
 this
 couple’s
 financial
 management
 strategies
 in
 terms
 of
 the
 basic
 steps
 of
 
financial
 planning.
 If
 they
 were
 really
 motivated
 to
 make
 a
 change,
 where
 might
 they
 
begin?
 

 
Chapter
 #2
 Introduction
 to
 Personal
 Income
 Tax
 
End
 of
 Chapter
 problems
 #5,
 #6
 &
 #7
 (page
 57)
 

 
5.
  Assume
 that
 you
 have
 a
 mortgage
 at
 6%
 and
 also
 have
 $6000
 that
 can
 be
 used
 to
 
either
 reduce
 the
 mortgage
 or
 to
 invest
 at
 5%.
 Should
 you
 (i)
 reduce
 your
 mortgage
 by
 $6000
 
and
 borrow
 to
 invest,
 
 (ii)
 invest
 the
 $6000,
 or
 (iii)
 simply
 reduce
 the
 mortgage
 by
 $6000?
 

 
Assumptions:
 the
 mortgage
 company
 will
 not
 charge
 a
 penalty
 if
 you
 decide
 to
 reduce
 your
 
mortgage;
 your
 combined
 federal
 and
 provincial
 marginal
 tax
 rage
 is
 39%;
 if
 you
 borrow
 to
 
invest,
 the
 interest
 will
 be
 tax
 deductible,
 but
 the
 interest
 paid
 to
 your
 mortgage
 is
 not
 
deductible.
 
 

 
6.
  Question
 6
 per
 text,
 excluding
 (d)
 How
 much
 income
 tax
 does
 she
 owe
 or
 will
 she
 

receive
 back?
 

 
7.
  Suggest
 some
 ways
 to
 reduce
 a
 family’s
 income
 tax.
 For
 each
 approach,
 indicate
 

whether
 it
 would
 be
 considered
 tax
 avoidance
 or
 tax
 evasion.