Set up your Excel workbook and begin reviewing the options in Module 8 Portfolio Project and choose one. Using the skills from Module 2, prepare the analysis of the two capital budgeting options. Submit your Excel worksheet for grading.
Module 8 Portfolio:
You have been tasked with creating a capital budget, retirement forecast, and presentation for a high net worth client. The following information is provided:
Married couple- $250,000 per year income from W-2 form.
Ages 45 and 42, no children.
In addition to the W-2 income they own a business (S-Corporation) and typically see about $100,000 in dividends each year (total between the two of them).
Current retirement savings = $1,500,000.
They contribute the maximum possible to a Simple IRA each year.
They would like to retire at 50 with $2,500,000 in their retirement account.
They will also be continuing ownership in the S-corp and plan to continue to receive the dividends after retirement.
They are looking at the following options from a capital budget perspective (NOTE: they can only choose one):
Purchase a rental property for $500,000. It will create cash flow of $60,000 per year in rent, which will increase by 4% per year over the next 10 years. They then anticipate being able to sell the property for $750,000.
Invest $500,000 in a 10 year 10% coupon bond, paying out dividends semi-annually.
Submit an Excel workbook with the following worksheets:
Capital Budget calculations for both options.
Retirement forecast based on the above information (NOTE: do a separate forecast for each of the possible capital expenditure options).
Summary worksheet
Submit a 3-5 page Word document that summarizes your findings, calculations, and recommendations.
Submit a 5-7 slide PowerPoint presentation that summarizes your analysis in a way non-financial clients can understand. In this portion of your presentation, include a cover slide, your analysis, and a conclusion slide with references formatted according to the CSU Global Writing Center (Links to an external site.)(which can be accessed by selecting “Library” in the Canvas navigation panel). (which can be accessed by selecting “Library” in the Canvas navigation panel). For tips on creating presentations visit the CSU Global Writing Center Visual Presentation (Links to an external site.) page (which can be accessed by selecting “Library” in the Canvas navigation panel).
