finance homework ！1hour only！
fakerxiang
homework1.docxAs a lender, go through the information provided and determine if the clients qualify for their loan request.
Jesiah and Cassandra Hamilton have been married for 2 years. They are presently living in an older home and have come to you seeking financing so that they can renovate their kitchen in their home. Jesiah has priced out the renovation project and brought in some written estimates. He estimates the cost of the renovation to be $30,000. Jesiah and Cassandra want to repay the loan over 5 years. Jesiah has taken a building construction course at NAIT is excited to use the skills he has learned. The Hamilton’s house is valued at $360,000. The mortgage was for $331,200 with a 5-year term, amortized over 25 years at 3.3%.
Please Calculate the Monthly Mortgage Payment:
(1 mark)
They have made 23 payments on the mortgage. Please calculate the balance owing on the loan.
(1 mark)
This branch approved the mortgage. Taxes are $300 a month and heating is estimated at $150. They currently have $6,000 in a joint savings account at the branch. Both of them contributes to an RRSP. Jesiah has clear title to some undeveloped property 80 miles west of Edmonton he inherited a few years ago. It is currently valued at $30,000. Eventually Jesiah would like to build a cabin on the property but realizes that this is a long term-goal. Jesiah pays about $25 a month on the taxes. Cassandra also has recently received an expensive painting from her grandmother valued at $35,000 with a certificate of authenticity.
Jesiah, 29, has been working for RV World for 6 years. He grosses $108,550 annually as lead Heavy Duty Mechanic, much of this is overtime income. Jesiah has provided his Notice of Assessments for his income verification as you has requested (see attached).Cassandra, 25, is in her last year at the U of A. Cassandra works part-time at the U of A bookstore as a cashier she has provided a salary letter, she grosses approximately $12,590 per year. Her manager informed her she was going to receive a 2% increase next month.
19 months ago Jesiah bought a Silverado for $52,500 and financed it with a loan (from a competitor) for $47,300 at 5.22% for 7 years compounded monthly.
What is the monthly truck payment? (1 mark)
What is the balance owing today for the truck? (1 mark)
The current value of the Silverado is estimated to be $40,700.
Equifax shows he has never missed a payment and confirms that there are 65 months remaining on the installment loan. Ratings on their credit cards from Costco ($2,500 credit limit)R2, RBC VISA ($3,000 credit limit) are R2, they do however have a Capital One MasterCard with a R2 rating(credit limit $2,500). They both like the finer things in life, cards are continuously at the maximum credit limits. The do have a The Bay credit card reporting on their credit bureau with a limit of $1,000 but nothing is currently owing.
Jesiah recently received an inheritance in the amount of $51,000 . Currently he has it invested in a Bond Mutual Fund. Jesiah does not want to access these funds at this time and would like the funds to remain as is. He is planning on using these funds in the future to build a cabin on his land.
Notice of Assessment for Jesiah Hamilton Tax year 2018
|
Line |
Description |
$ Amount |
|
150 |
Total Income………………………………………… Deductions from total income……………………… |
$118,102 $17,715 |
|
236 |
Net Income…………………………………………… Deductions from net income…................................ |
$100,387 0 |
|
260 |
Taxable Income……………………………………… |
$100,387 |
|
350 |
Total federal non-refundable tax credits…………………………………………………. |
$3,479 |
|
6150 |
Total Alberta non-refundable tax credits…………………………………………………. |
$2,792 |
|
420 |
Net Federal Tax………………………………………. |
0.00 |
|
421 |
CPP contributions……………………………………. |
4,207.50 |
|
435 |
Total Payable……………………………… |
4,207.50 |
|
437 |
Total Income Tax Deducted………………………… |
$31,119.97 |
|
482 |
Total credits…………………………………………… (Total payable minus Total credits)................................................................ DR [Penalties............................................................ DR Arrears interest................................................... DR Balance Due from this assessment......................................................... DR Balance due........................................................ DR |
3,175.62
1031.88 0.00 0.00
0.00 $1,235 |
Notice of Assessment for Jesiah Hamilton Tax year 2019
|
Line |
Description |
$ Amount |
|
150 |
Total Income………………………………………… Deductions from total income……………………… |
$143,848 $21,002 |
|
236 |
Net Income…………………………………………… Deductions from net income…................................ |
$122,846 0 |
|
260 |
Taxable Income……………………………………… |
$122,846 |
|
350 |
Total federal non-refundable tax credits…………………………………………………. |
$3,497 |
|
6150 |
Total Alberta non-refundable tax credits…………………………………………………. |
$2,566 |
|
420 |
Net Federal Tax………………………………………. |
0.00 |
|
421 |
CPP contributions……………………………………. |
4,207.50 |
|
435 |
Total Payable……………………………… |
4,207.50 |
|
437 |
Total Income Tax Deducted………………………… |
$36,853.8 |
|
482 |
Total credits…………………………………………… (Total payable minus Total credits)................................................................ DR [Penalties............................................................ DR Arrears interest................................................... DR Balance Due from this assessment......................................................... DR Balance due........................................................ DR |
3,175.62
1031.88 0.00 0.00
0.00 $1,826 |
Cassandra's Income Confirmation Letter:
Jackson Peters
Human Resources Manager
University of Alberta
116 St and 85 Ave
Edmonton, Alberta
T6G 2R3
February 14, 2022
To Whom This May Concern,
This letter is to confirm that Cassandras Hamilton is an employee of the University of Alberta Bookstore. Cassandra has been working in a part-time position since September 15th 2020. Her annual salary is 12,590 per annum.
If there are any questions or concerns, please feel free to call me at 780-452-3216.
Thank you,
Jackson Peters
Calculate Jesiah's Monthly Income: (1 mark)
Calculate Cassandra's Monthly Income(assume she is paid equally each month of the year): (1 mark)
Calculate their assets and liabilities: (Do not leave any blank. Enter "0" if applicable.)
|
ASSETS |
VALUES |
|
Property |
(1 mark) |
|
Bank Account |
(1 mark) |
|
Land |
(1 mark) |
|
Silverado |
(1 mark) |
|
Investments |
(1 mark) |
|
Other |
(1 mark) |
|
Total Assets: |
(1 mark)
|
|
LIABILITIES |
VALUES |
MINIMUM PAYMENT |
|
Mortgage |
(1 mark) |
(1 mark) |
|
Loan |
(1 mark) |
(1 mark) |
|
Costco Mastercard |
(1 mark) |
(1 mark) |
|
RBC Visa |
(1 mark) |
(1 mark) |
|
Bay credit card |
(1 mark) |
(1 mark) |
|
Capital One Card |
(1 mark) |
(1 mark) |
|
Total Liabilities: |
(1 mark) |
|
Calculate Net Worth from lender perspective: (1 mark)
In reviewing their current financial situation, you would recommend that the Hamiltons also consolidate their consumer debts along with their renovation request.
Calculate the consolidation loan at 6% for 5 years.
Monthly loan payment: (1 mark)
Calculate Jesiah and Cassandra's GDS: %(1 mark)
Calculate Jesiah and Cassandra's TDS: %(1 mark)
Do you approve the loan?(1 mark)
|
|
|
No |
|
|
|
Yes |
You recommend to Jesiah and Cassandra that they consider using the Investment asset as collateral to reduce the interest rate on their loan from by 2%. Julia thinks this may be a good idea, calculate the loan payment at at this new rate.
How does this change their TDS calculation? %
They agree to use the Investment asset as collateral. What documentation is required?
|
|
|
Obtain a statement, verify the total, and secure collateral for the loan following your financial institution's processes. |
|
|
|
Obtain a statement,make a note in your file that you are taking as collateral. |
|
|
|
Recent statement of investment account. |
|
|
|
Register a message on your computer system for the investment account that it is taken as collateral for this loan. |
If you were to consider Cassandras income with the intended increase of 2%, what would you require in order to use for your file?
|
|
|
A new letter confirming her new income total. |
|
|
|
Write a note on her existing letter that has been provided. Be sure to date and sign your name. |
|
|
|
Call her employer to confirm and verify the raise. |
|
|
|
Get her last two years NOAs and take the average. |
What information to you need to ensure that you payout all debt correctly? What if anything will you need to prepare?
|
|
|
Only payout letters are required. |
|
|
|
Confirmation of all balances of accounts being consolidated |
|
|
|
Cut-up credit cards |
|
|
|
Payout letters, cut-up credit cards, and confirmed outstanding balances. |
|
|
|
Payout Letters and Cut-up credit cards |
Analysing using the 5 C's of credit!
1) Character (5 marks): Is it satisfactory/marginal/unsatisfactory? Justify your decision.
2) Capacity (2 marks): Is it satisfactory/marginal/unsatisfactory? Justify your decision.
3) Capital (2 marks): Is it satisfactory/marginal/unsatisfactory? Justify your decision.
4) Collateral (2 marks): Is it satisfactory/marginal/unsatisfactory? Justify your decision.
5) Credit(2 marks): Is it satisfactory/marginal/unsatisfactory? Justify your decision.
Credit Decision:
Summarize your final decision using your analysis of the 5C's to defend your position. (6 marks)
