School fees planning

Question 1

What formula is used when calculating future school fees?

Answer 1

FV = PV (1+i)n

Question 1

What can a cash flow model be used to project? [3]

Answer 1

• A client’s income & expenditure
• whether they can meet their essential expenditure
• any shortfalls.

Question 2

When producing cashflow statements, you should not include income from savings & investments if what?

Answer 2

If it is re-invested.

Question 3

You should not include what as they are not really income at all?

Answer 3

EEE taxable benefits

Question 4

Should income from CB be included?

Answer 4

Yes

Question 5

Name 5 limitations of cashflow models.

Answer 5

• assumptions can be wrong
• estimated figures require regular reviews
• client’s objectives or circumstances may change
• tax wrappers & allowances may be withdrawn
• doesn’t take into account market risk
• doesn’t consider liquidity risk

Question 6

If the family budget is dependent on the earnings of both, what other area should be raised as a priority?

Answer 6

Financial protection