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Automobile insurance premiums$4,000
Learning Goal: I'm working on a finance question and need an explanation and answer to help me learn. FIN 401 Course Project Maximum score = 250 points Project Guidelines:Cover page required for each phase with the following:Your Name FIN 401 Phase 1 or 2 Project must be typed except tax return where typing is optional. Balance sheet and income statement on one page each. Instructor will assign groups. THE CASE Meet the Fox Family Frank and Lois have hired you to be their financial planner. They provide you with the following information and questions.In addition to answering their questions, anticipate the follow up questions that Frank and Lois will ask you. For instance, if you determine that they are not on track to meet their retirement goal provide a solution or multiple options for them to consider. Your paper and presentation should be to the Fox family not to the FIN 401 instructor. For instance, do not write: "I would tell the Foxes...". During the presentation days, the instructors will ask questions as if they were Frank and Lois. Start with the attached information and the following details. Today is 1/1/2019 Frank and Lois are married and were each born on 1/1/1977. They wish to retire on 1/1/2040 and have asked you to build a retirement plan until their 90th birthday. They have 1 child, age 6, whom they claim as a dependent. They would like to save to pay for 70% of the cost of Michigan State University in 12 years at a current total (tuition, room and board, books, and expenses) cost of $21,000/yr. Overall Inflation = 4% Post retirement rate of return on assets = 6% Pre-retirement rate of return on assets = 7% Following is the first phase of the project: PHASE 1 Develop a 12/31/2018 Balance Sheet (20 points) Develop a 2018 Income Statement with 4 distinct sections - Income, Savings, Taxes, Expenses (25 points) Prepare a 2018 1040 pages 1 and 2 from line 1 to 15 and any applicable schedules of the following: A, B, C, D (you will have to find a blank return and schedules) (25 points) Please note that during the year, Frank and Lois had the following stock transactions:12/21/18 in Joint Brokerage account - Sold 500 shares ABC corp. for $8,000. Shares were purchased 12/15/2008 for $12,000. 12/20/2018 in Frank's 401(k) - Sold 2,000 shares XYZ mutual fund for $8,000. Shares were purchased 12/27/2008 for $6,200. After the presentation of phase 1, the correct answers will be posted on the web portal. That information should be used for Phase 2. PHASE 2 For each problem, retype the question and put your entire answer under that question before beginning the next question. If Frank and Lois are not able to reach their goals without changes to their approach, please be specific as to the steps you recommend that they take. Retirement Number (45 points)Please show your work. Assume no social security or pension In today's dollars, they would like $108,000 (including taxes) in year 1 of retirement How much will they need to accumulate on their retirement date to meet their spending needs? How would this number change if they wanted to end their lives with $450,000 of investments to leave to their child? (Be careful. This part is not as obvious as it seems) Retirement Plan (20 points)Please show your work. Assuming they do not plan to leave anything to their child, how much will they have to save each year to achieve their Number? Education (25 points)How much will they need to save each year to achieve their goal of paying 70% of the total cost of their child's 4 year MSU education? What other advice would you give them about paying for college? Annual inflation rate for college expenses = 6% College asset rate of return = 7% Investments (20 points)They continue to have access to their 401(k) and 403(b). Including, but not limited to these plans, in what account(s) would you recommend that they save their retirement funds? Why? Please account for all of the savings Frank and Lois will need to do. Types of Investments (25 points)What types of investments would you recommend to Frank and Lois? Why? Social Security (10 points)If they ask you to include Social Security in their retirement projections, what advice would you give them? Insurance (25 points)Comment on their insurance needs and your recommendations for Frank and Lois. Assume in all circumstances that they would want to maintain a lifestyle similar to their current lifestyle. Be specific as to amounts and types of insurance that you recommend. Include comments on life, disability and long term care at a minimum. Estate (10 point)Comment on their estate planning needs assuming they do not have an estate plan today. Client Name: Frank and Lois Fox Year: 2018 Ending BalanceIncome/Expenses Amount (Yearly) 401(k) Contribution$12,000 401(k) Frank$322,000 403(b) Contribution$11,000 403(b) - Lois$388,000 Joint brokerage account$39,000 Auto Loan$10,000 Auto Loan Interest$1,000 Auto Loan Principal$5,000 Auto Maintenance$2,500 Automobile - Frank$18,000 Automobile - Lois$25,000 Automobile Insurance Premiums$4,000 Checking$45,000 Interest Income from checking a/c$1,200 Child - Private School Tuition$8,000 Clothing$5,000 Credit Card$11,000 Credit Card Payments Interest$2,000 Credit Card Payments Principal$1,000 Entertainment$24,000 Federal Income Tax (W/H)$37,000 FICA$14,000 Food$10,000 Furniture / Household$34,000 Homeowners Insurance Premiums$1,500 Jewelry$26,000 Alimony to Frank's ex wife$4,000 Maid$6,000 Mortgage on Residence$268,000 Mortgage Payment Interest$16,000 Mortgage Payment Principal$3,000 Personal Residence$405,000 Property Tax (Principal Residence)$5,000 Gross Salary - Frank$91,000 Gross Salary - Lois$92,000 Savings$16,000 Utilities$9,000

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