Wk 10 Debt Consolidation In-class Assignment No

.docx

School

Algonquin College *

*We aren’t endorsed by this school

Course

ACC 6124

Subject

Finance

Date

Apr 3, 2024

Type

docx

Pages

2

Uploaded by CorporalCatPerson754

Report
Debt Consolidation In Class Assignment 3 This assignment will be completed in-class in groups of three or four. One student should submit the completed assignment through D2L once it is complete. Please ensure all group members names and student number are on the assignment. Case Study – Tibor: Tibor Taylor, age 34, is single and has just returned to the workforce full-time as a graphic designer. Previously, he had reduced his work schedule to part-time so he could complete his master’s degree. He thought he had enough money saved to cover his expenses while he was in school, but he soon realized it wasn’t enough. He has come to you for help to get his spending and debt under control. He also wants to discuss his mortgage as he is approaching the end of his term in 2 months. He has provided you with the following information: Net Worth Statement Tibor Taylor Year Ending 20XX Assets: Chequing Account Emergency Fund – TFSA Car Personal Possessions Condominium Total Assets $2,000 $6,000 $16,000 $12,000 $400,000 $436,000 Liabilities: RBC VISA Scotiabank Mastercard Unsecured Line of Credit Mortgage Total Liabilities $12,000 $11,000 $36,000 $235,000 $294,000 Net Worth: $142,000 Debts Balance Interest Rate Monthly Payment # Years to Repay RBC Visa $12,000 19% $240 8.4 Scotiabank M/C $11,000 19.99% $220 9.2 Un. L of C $36,000 8% $1,080 3.1 Mortgage $235,000 4.25% $1,450 20.08 Total $294,000 $2,990 Cash Flow Statement Tibor Taylor Year Ending 20XX Cash Inflows: Gross Income Deductions (CPP, EI, Taxes) Net Income (Take home pay) $92,000 $22,488 $69,512 Cash Outflows: Mortgage Payment Property tax Condo fees Heat Other Utilities Home insurance Auto insurance & Maintenance Gasoline Food Entertainment Clothing Other expenses/Vacation RBC Visa payment Scotiabank Mastercard payment Line of credit payment Total Expenses $17,400 $1350 $3,000 $2,000 $2,900 $1,000 $1,500 $3,600 $3,200 $6,400 $2,400 $8,000 $2,880 $2,640 $12,960 $71,230 Deficit ($1,718) 1. Review Tibor’s current financial information and briefly comment. (No Calculations required) (4 marks) 2. Analyze a debt consolidation strategy using an instalment loan for Tibor. a. Briefly research two financial institutions that provide Installment loans and provide the interest rate, term and any additional features. (2 marks)
b. Based on your research, choose the best option for Tibor and explain why. (1 mark) c. How much money will Tibor save with this debt consolidation loan. (3 marks) d. List two benefits and two drawbacks for this debt consolidation. (2 marks) 3. Analyze a debt consolidation strategy consolidating Tibor’ debt into his mortgage . a. Research a financial institution that provides a 5-year fixed mortgage and a variable rate mortgage and provide the interest rate, term and additional features. (2 marks) b. Based on your research, choose the best option for Tibor and explain why. (1 mark) c. Does Tibor have enough equity in his condo to do a mortgage consolidation? Why or why not? (2 mark) d. Tibor would like to be able to cover his cash flow deficit and to have an additional $6,000 to put towards savings and other goals. Can he leave his amortization the same or will he need to extend his amortization? If yes, by how many years. (7 marks) e. What three recommendations would you make to Tibor, including 2 benefits and drawbacks for each. (6 marks) Total Marks - /30
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
  • Access to all documents
  • Unlimited textbook solutions
  • 24/7 expert homework help