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FNCE 627: Case Study and guideline
Guideline
Please submit 8-10 pages (excluding cover page, table of contents and References) of a written financial plan following the table of contents as outlined below.
1.0 Introduction
2.0 Assumptions and Key Considerations
3.0 Financial Analysis
3.1 Balance sheet
3.2 Cash Flow statement.
4.0 Emergency fund
5.0 Insurance coverage
6.0 Children’s Education
7.0 Retirement planning and Individual pension plan (IPP)
8.0 Major purchase and asset allocation
9.0 Estate planning
10.0Tax planning for selling the Business.
11.0Recommendations and conclusion
The report has to be written using APA format i.e,
1.Double-space all text, including headings.
2.Use an accessible font (e.g., Times New Roman 12pt., Arial 11pt., or Georgia 11pt.).
There will be a 5 % reduction of mark for any additional one page of report. You must cite at least 5 peer-reviewed journals in addition to textbooks and other references. APA format of citation must be used. The rubric is attached here on Brightspace.
You are provided with the David’s family ‘s annual gross household income which is their salary and dividend from their business. You are supposed to
calculate their home take income
Estimate or assume their annual personal expenses using data from cost of living, https://www.numbeo.com/cost-of-living/in/Vancouver
or stat Canada https://www.statcan.gc.ca/en/topics-start/food-pri…
Make sure that all the 6 points at the end of the case study below must be addressed in your report.
A screenshot of the financial statements must be added to the body of the report, not in an appendix.
Note, turn in one pdf file only – good luck!
CASE STUDY
David Hill: DOB December 31, 1980
Sherry Hill: DOB May 12, 1982
David and Sherry have been married for 15 years and appear to have a stable and committed relationship.
They have three children:
Divan: DOB March 5, 2014
Ruth: DOB May 12, 2012
Zael DOB Dec 23, 2010
In June of 2018 David launched a technology-based business in the garage of their home in West Vancouver. He wanted to work with other socially conscious entrepreneurs. They have become increasingly successful and last year’s revenues were about $2 million. They expect to do better than that next year. Sherry works 20 hours a week in the business and takes a salary of $95,000 annually. David’s salary is $160,000. They each take dividends from the corporate account of about $25,000 annually.
They have been instructed by their accountant to maximize their contributions to their RRSP’s which are now: Sherry: $300,000 David: $350,000. They also have a joint investment account valued at $4,000,000. They have a corporate account (Hill Holdings LT) that has only cash in it: $1,500,000 CAD and $600,000 USD. Many of their clients pay in US funds and their accountant has instructed them to keep it in that currency. They purchased a lot in Hawaii valued currently at $300,000 USD and are wanting to build on it in the next three or four years. In the meantime, they are strategizing ways to get a townhouse at Whistler. They are avid skiers and love the outdoors. They are very devoted to the family and getting as much time as possible with the kids while they are young.
They are planning to sell the business later this year. With the growth trajectory they currently have, the calibre of the staff they currently employ and projections for future revenue, Hill has had an estimate from a CPA friend of his that the business (and its intellectual property) could probably sell for between $11 and $13 million USD. But the friend also advised that if he waits for the patent for one of his side projects to come through it could be as high as $20 million USD.
They have a moderate lifestyle. They have asked us to weigh in on:
1) What they should do regarding selling the business.
2) Education for the kids
3) Tax planning for when they sell the business.
4). What kind of insurance they should have.
5) How much they might need to have to never work again and maintain their current lifestyle
6) How they should invest their funds.
Good luck!
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