Laura Case Study Assingment Help with Solution
ASSETS AND LIABILITIES
The following information pertains to assets and liabilities for the family as at 31.12.2014 :-
1. Laura’s CPF balances in her Ordinary, Special and Medisave accounts amount to a $122,000, $24,000 and $40,000 respectively.
2. With investments, Laura is risk averse. This is because she made huge losses during the last global financial crisis, having been advised to invest in structured deposits. As a result of this loss, she holds about $90,000 in a savings account, and $120,000 in a one-year fixed deposit. Current interest rates applicable to both accounts are 0.35% and 1.18% respectively.
3. Laura does not have any investments in stocks and shares, or in unit trust.
4. The house that Laura is now living in with her children was purchased 6 years ago in her own name. The purchase price was $1,080,000, and the couple paid $196,000 in cash and CPF, and took up a loan for the balance. As at 31 December 2014,
the house was valued at $709,000
outstanding balance on the loan was $719,429
the interest rate on the 25 year loan has remained unchanged at 1.8% per annum,
monthly rest, resulting in a monthly instalment of $3,728. Laura uses all their monthly CPF Ordinary Account contribution1 to pay for the instalment, and tops up the balance with cash.
5. During a recent holiday to Europe with her children, Laura charged $8,000 to her credit card. She has yet to repay the credit card company.
6. Laura does not own a car.
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Question 1 (25 marks)
Prepare for Laura the following:
(a) Cash Flow Statement for the period 1 Jan 2014 to 31 December 2014 (From the facts given in the case study and some of your own research, determine the missing figures for Interest from Savings and Fixed Deposit, as well as the portion of CPF and Cash used for the housing instalment)
(b) Balance Sheet as at 31 December 2014
(a) With the recent demise of Harry, Laura is worried about her retirement needs and she decides to start planning for her retirement. Her desired monthly retirement income is $4,500. Using the information given in the case study, you are to determine the lump sum Laura needs to have when she retires at age 62 by using the CPF Retirement Estimator found at “Retirement Planning – Retirement Estimator” using the 2nd option.
In your answer, insert a detailed printout of your results.
(b) While clearing Harry’s belonging, Laura found the bank loan document. Please read the reference given at CPF website
“Retirement Planning –RetirementReady.sg -Business Centre – Housing – Financial Aspects of Housing – Mortgage Loan Basics – Loan Repayment Period” and
“Retirement Planning -–RetirementReady.sg -Business Centre –Housing -Your common Housing Questions Answered – Refinancing and Negative”,
Explain what will happen if
i. Laura switches from monthly rest interest rate computation to an annual rest interest rate computation
ii. Laura decides to refinance her property now (ie negative equity)(c) Section 25 (5) of the Life Insurance Act
“No Singapore insurer shall use, in the course of carrying on insurance business in Singapore, a form of proposal which does not have prominently displayed therein a warning that if a proposer does not fully and faithfully give
COR167e Managing Your Personal Finances Tutor-Marked Assignment 02 SIM UNIVERSITY Page 7 of 7
the facts as he knows them or ought to know them, he may receive nothing from the policy.”
i. Explain the principle of Utmost Good Faith (Uberrina Fides) in relation to
Insurance contracts. What happens when this principle is breached?
ii. Which policies will pay out, and how much will be paid, if Laura were to
a) contract a major illness?
b) (1 year after contracting a major illness) pass away?
(a) What is the criteria for qualifying for Working Mother Child Relief (WMCR) and how much
will Laura qualify for?
(b) The SRS is a voluntary scheme for retirement purposes. How will Laura be able to withdraw
her SRS money when she retires? Explain with regards to withdrawal and taxation
(c) Laura’s Parenthood Tax Rebate stands at $6,200 at 31 December 2014. Assuming that Laura’s
2014 income results in a tax payable of $4,180, what amount of tax will she have to pay for
the Year of Assessment 2015? What happens to her Parenthood Tax Rebate after her tax is
(d) Who will inherit Harry’s estate? What should Harry have done if he had wanted to give all his
assets to his spouse?
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