Bryan called and said that he had compiled a list of assets and liabilities and would...

Bryan called and said that he had compiled a list of assets and liabilities and would send them over to you. The list came a few days later. His assets included a home worth $427,770, approximately $389,697 in securities, two cars worth $65,500 with loans of $48,950 against them, and other assets including jewelry (worth $7,750), art ($13,500), and furniture ($9,095). Bryan and his wife, Crystal, have a money market fund with $2,550, a joint savings account of $4,573, student loan debt outstanding of $23,175, and credit card balance due of $32,050. Their house had a $373,250 mortgage.

Construct the balance sheet for Bryan and Crystal based on the information available.

What are the total assets for Bryan and Crystal? (2 points)

What are the total liabilities for Bryan and Crystal? (2 points)

What is Bryan and Crystal’s total net worth? (2 points)

If you were a financial planner, what would you tell Bryan and Crystal about their net worth? (4 points) Be sure to elaborate.

Expert Solution

If I were a financial planner to them, then my focus would on investing some portion of their wealth in the equity and paying off debt early. Here their age is not given nor their future earning potential so we can not recommend a lot but given that they do have good asset base and small liabilities the focus should be on generation of income or increasing the capital return and that can be achieved by investing in the stock market. They should put some portion of their fund in the equity market and some in debt market, money market fund may be good idea for short term but in the long term it might not be a good idea. Also, the focus should be on paying off debt early to reduce the interest expense.

jeff jeffy answered 1 year ago

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