Reference no: EM133172145
Question - You are the financial advisor for Jennifer Jackson who came to get advice from your financial advising firm. She has specific questions for you, but your method is to look at a client's financial situation first and ask many questions about their assets and debt, and much more. Because of all of your questions, she tells you the following:
Jennifer is 25, just a few years out of college, and works as a sales representative for a pharmaceutical company, earning $60,000 a year (or a monthly gross income of $5,000).
Jennifer has a $4,000 car loan at 3% APR, with about 18 months remaining on the loan.
Jennifer has $1,500 in a checking account, $3,000 in a savings account, and a car worth $7,000 if she were to sell it.
Jennifer recently inherited $8,000 when her grandmother died, but has yet to deposit the check.
Jennifer is considering going back to school to get her Master's degree in Business Administration so she can advance in her career.
Jennifer came to see you because she has the following questions below. Pick two (2) questions to answer out of the six below (try not to just pick the first two questions on the list) and provide recommendations, including an explanation of WHY the recommendation is appropriate for her situation.
Q1: Based on Jennifer's financial situation, develop a SMART goal for her and identify whether it is a short term (1-2 years) goal or intermediate (2-10 years) goal.
Q2: If Jennifer were to use the inheritance money for her MBA, she would not be able to use that money for other things. Explain to Jennifer what an opportunity cost is, including some examples of things should could do instead with the inheritance money.
Q3. Determine Jennifer's net worth and explain the calculations to her, including what are her assets and what are her liabilities.
Q4: If Jennifer were to use the inheritance money for her MBA, how much would the $8,000 be worth 3 years from now at 7%? Explain the time value of money calculation using these numbers to Jennifer.
Q5: Explain to Jennifer the purpose of a capital budget and how earning her MBA is considered an investment.
Q6: What kind of tax planning strategies can she choose in terms of deductions or tax credits when going back to graduate school for her MBA and why?
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