**Name: _____________________________________________ Date: ______________**

**FIN305OL Individual Project**

**The Steins Case Analysis**

Please respond to each of the following questions in full detail, providing your formulas and rationale. Add as many comments as you wish. Your score will be based upon your reasoning and the depth of your responses. Keep in mind that in financial planning, there is often no one right answer.

1. Evaluate the Steins’ estate planning documents. Are they adequate for their situation? What would you recommend and why?

2. Is the Steins’ emergency fund adequate? Why or why not? What would you recommend and why?

3. If the Steins refinance their existing mortgage with a new 15-year mortgage at the stated interest rate, what will their monthly payment for principal and interest be? Show all variables.

4. If Jenny replaces her car, using the value as a down payment on a new vehicle, what is the shortest-term loan that would keep her payments about $300/month if the new car costs $28,000? Show all variables.

5. Describe 2 techniques that you think would be suitable for education funding for Jason. Give the advantages and disadvantages of each.

6. Suppose Jenny is offered a severance package at her law firm. The package would give her a choice of: (1) continue to work at the firm at a reduced salary of $50,000 per year with the difference ($50,000) plus 6% interest to be paid under a non-qualified deferred-compensation plan at death or normal retirement age; or (2) take a lump-sum payout in cash of $500,000. What would you advise her to do? Why? Show your work.

7. The Steins would like to retire when Benny reaches age 67. If they continue to contribute the same amount each year to their 401(k) plans, how much will they have in their 401k’s? (Assume the current rate of return on investments.) Show your work.

8. Assuming no further contributions to their IRAs, how much will they have at retirement? Show your work. Combining the 401k’s and the IRAs, how much will they have at retirement?

9. The Steins believe that in retirement, they could live on $100,000 per year (today’s dollars). Assuming a 3% rate of inflation, how much would they need each year when they retire? Show your work.

10. The Steins want to plan for 25 years in retirement. Assuming they need the annual amount computed in question 9, how much would they need in their retirement savings when they begin retirement? Show your work. Will they have enough?

11. EXTRA CREDIT: What could the Steins do to ensure they have enough for retirement? (5 to 10 points for each detailed solution. Maximum 50 points.)

I understand that my submission attests to the fact that I have neither given nor received help from any person (other than the instructor) in completion of this assignment.