Assignment Instructions/ Description
Case StudyShelly and Alan are both 38 years old. They are non-smokers and have 2 young children,Brandon (8) and Ally (6). They have recently switched financial institutions to renew theirmortgage and as a special bonus have been offered a free financial plan. The team has met withthe couple and collected the following information see attached�Question #1Identify Shelly and Alan's life cycle stage and based on their stage assess strengths, weaknesses,opportunities and threats of their current financial situation using all applicable financial ratiosand formulas.Question #2Shelly and Alan have recently lost a close friend in a car accident. They feel so sad to see theirfriend's wife left struggling to raise and provide for her 2 children all alone. Shelly and Alan havegiven some thought to the family's financial affairs should an unexpected tragedy occur. Theirwishes include: family remains in the home, $140,000 is available for the children's education, ifone spouse passed away the other would need supplemental income equivalent to 50% of theother spouse's gross income until Ally completed a post secondary degree at 22. If they bothpassed away Alan's sister would take care of the children and would require income of $20,000each until Ally completed a post secondary degree at 22.Shelly and Alan would like the team to assess the amount of life insurance they would need if:1) Shelly passed away 2) Alan passed away and 3) both pass away.4)They also want to know if there is a rider that would provide protection for both theirchildren until they are adults.5) Shelly and Alan are also concerned about getting sick or being in an accident and not beingable to provide for their family. They ask you what steps they could take to protect againstillnesses or injuries in case they are unable to work for 6 month - 1 year.� .05 discount rate� make and state any other assumptions and ignore estate taxesQuestion #3Provide 2 options of how Shelly & Alan could use their monthly surplus cash to address any ofthe weaknesses, opportunities or threats identified. Provide rationale for each option and howit addresses a gap or capitalizes on an opportunity, state any information/questions you mayhave of the clients and clarify next steps.�Can a financial advisor please provide step by step explanation, answer and calculations for part 2?Image transcription textDescription
Assets
Liabilities Income
Expenses/Payments
$145,000
Annual Earnings
Shelly $83M + Alan Scom
assume on income tox
Home
$550,000
Mortgage
5350,000
$1,840/mo
not insured
Heat/Hydro/ Taxes
$700/mo
Cars (2)
$35,000
Car loan
$15,000
$450/mo
$2,500
Savings Account
joint)
$25,000
Shelly's RRSP
contributing
$2,000/vr]
$40,000
Alan's RRSP
contributing
54,000/VT
$145,000
Group life insurance
policies
Shelly $83M, Alan $60M
spouse is beneficiary for
both
Credit card
$5,000
Minimum payment is 5% / mo
Low interest rate credit card
owing
12% with a limit of $12,000)
Groceries/ Drug Store $600/mo
children's activities, travel clothing
General Expenses
$6,000/yr... Show more�