Personal Finance, Fourth Canadian Edition Solution Manual

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NAMEDATEPart 1: Brad MacDonald—A Continuing CaseCASE QUESTIONS1.What is Brad’s financial planning life stage? With respect to his current financial position, what are someof the things that Brad should be considering?Brad is in the Early Career life stage. With respect to his current financial position, Brad shouldconsider following the pay-yourself-first principle. In addition, he should try to manage his debt a littlebetter instead of having his debt manage him. Brad should also consider investing in mutual funds.2.What are Brad’s major goals? Evaluate his goals with respect to how specific, measurable, and realisticthey are. Are these short-term or long-term goals? What additional goals could you recommend toBrad for the short and long term?Brad’s major goals are to: (1) gain control of his personal finances, (2) reduce his credit card balance,and (3) start to save $4000 per year toward retirement. With respect to his first goal, Brad needs tobe more specific with what it means to him to gain control of his finances. Does he just want to meethis monthly expenses, or would he like to have a certain dollar amount left over at the end of eachmonth toward his other goals? Furthermore, this will allow him to measure his progress toward achievinghis first goal. Brad should specify how much he would like to put down on his credit card each monthand at what point he would like to have his credit card paid off completely. Based on his cash flow, hewill be then able to determine how realistic his second goal is. Finally, although Brad has specified howmuch he would like to save for retirement he has not indicated at what age he would like to retire, howlong he will be retired, and what type of lifestyle expenses he will have in retirement. By specifyingthese amounts, he will be able to measure whether or not saving $4000 per year toward retirement isenough. For that matter, a budget plan will help him determine if saving $4000 per year is realistic.3.Prepare personal financial statements for Brad, including a personal cash flow statement and personalbalance sheet. Based on these statements, make specific recommendations to Brad about what he needsto do to achieve his goals of paying off his credit card balance and saving for retirement.Brad MacDonald Worksheet: Part 11

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Personal Finance by Jeff Madura, Ha...

Personal Finance, Fourth Canadian Edition Solution Manual

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