What is net worth create balance sheet, Financial Accounting

Gary and Joyce Yau, both 30, last month bought their dream house in London, Ontario. The purchase price was $450,000 plus addition fees such as taxes, legal fees, administration fees etc., of $10,000. They paid $100,000 cash-part of it from their savings and the rest was a gift from the parents---and borrowed a mortgage of $360,000 from the local bank. They find it very difficult to keep up with the monthly mortgage payments of $1,800, and have approached you for advice. The following is a summary of their financial situation:

Cash in chequing account                              $600

RRSPs                                                        $14,000

Five year GIC maturing this month               5,000

Mutual Fund                                               $31,000

Two cars                                                   $15,000

Personal Assets                                         $20,000

Joyce inherited the mutual fund a few years ago when her aunt died.  Although it does not pay dividends, she would really like to keep it, but she is willing to sell if it helps their financial situation.

Both work for small companies near their home and they have a combined take home pay of $80,200. They do not have any pension plans or other benefits.  They plan to have children in the next few years.  Their marginal tax rate is about 35%.  They have outstanding balances on three credit cards:  Visa ($21,000 @18% interest); Master Card ($11,000 @16% interest); and a department store charge card ($4,000 @24% interest). They are currently paying on these cards only the minimum payment of about $1,100 per month. On top of the credit cards, there is still a car loan with an outstanding balance of $5,500 @6% interest, and monthly payment of $450. They spend freely, and live from one pay cheque to another. They find saving money very difficult. They can borrow money at 6% interest for investment purposes.


a)  What are the most important areas of personal financial management for Gary and Joyce?

b)  What is their net worth?   Do not create a complete balance sheet.

c)  Give seven specific recommendations on personal financial management. Support your recommendation with calculations and/or explanations.

d)  Show how much interest and taxes they can save, if they ‘convertâ€TM their consumer loan to an investment loan as per the guideline in the textbook.

Posted Date: 3/29/2013 1:05:27 AM | Location : United States

Related Discussions:- What is net worth create balance sheet, Assignment Help, Ask Question on What is net worth create balance sheet, Get Answer, Expert's Help, What is net worth create balance sheet Discussions

Write discussion on What is net worth create balance sheet
Your posts are moderated
Related Questions
Necessary things for Receivership If no power to appoint a receiver is given by the terms of issue, the trustee for the debenture holders, or a debenture holder acting on behal

After going through this section, you must be capable to: -          Identify the time value of money; -          Know what gives money its time value; -          Identify

Interest on Zeroes: Tesla Corporation needs to raise funds to finance a plant expansion, and it has decided to issue 25-year zero coupon bonds to raise the money. The required

The Budvar Company purchases parts from a foreign customer on December 1, Year 1, with payment of 20,000 crowns 20,000 crowns to be made on March 1, Year 2.  Budvar enters into a f

Revocation, alteration and revival of a will 1. A will may be revoked or altered by the maker of it at any time when he is competent to dispose of his free property by will.  (

The Garraty Company has two bond issues outstanding.Both bonds pay $100 yearly interest plus $1,000 at maturity. Bond L has a maturity of 15 years, and Bond S a maturity of 1 year.

There are two projects A and B. The initial capital outlay of A and B are Rs.1,35,000 and Rs.2,40,000 respectively. There will be no scrap value at the end of the life of both the

The Wanless Corporation provides Internet consulting services to a wide-range of customers. The company's fiscal year ends on December 31. For the year ended December 31, 2011, the

APPOINTMENT OF TRUSTEES Capacity : Any person with legal capacity to hold property may be a trustee, except an infant. But the court will not appoint, and may remove:Persons u

You are considering whether or not to go to graduate school. Well... there are many things to consider, of course, such as the type of job you would thus get, the opportunity to li