Planit:Long Term Cash Flow Exercise Answer Key

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Question One:

Your client has given you all necessary information to complete a full life goals analysis and is meeting with you today to discuss her current situation and financial strategy. She want the focus of the presentation to be the major differences and resulting shortfall/surplus of the current and modeled scenario.

Using the Long-Term Cash Flow spreadsheets (current and model), answer the questions below:

• How soon will she run out of money in the current situation analysis?
• What is the resulting estate surplus from the modeled scenario?
• What is the accumulation within her RRSP Account 10 years from now for both the current and modeled scenario?

Answer:

Select your client from the Client Search screen, and then under the Documents and Reports section, click on the link to Your Working Documents.

To View the Long-Term Cashflow Spreadsheet – Current:

1. In the Your Working Documents screen, click on the title called Preparing Reports – Life Planning Audit Options.
2. Click on the Radio button beside Long Term Cashflow - Current
3. Click on the Generate Document link. The excel document will take approximately one minute to generate. Hit the Refresh button periodically until the completed document is ready for you to download.
4. When the document has completed calculating and is ready to view, click the Download button.
5. Repeat these steps to produce the Long Term Cashflow – Model after the first spreadsheet has completed downloading.

In the Long Term Cashflow – Current, scroll down to the last row called "Shortfall to Achieve Objectives". Now move across the spreadsheet to the right, and look for the first column showing a negative value instead of 0. Find the corresponding year for this negative value, and mark this as the first year she runs out of money.

In the Long Term Cash Flow - Model, scroll to the last column for the same row "Shortfall to Achieve Objectives" and note this number as the estate surplus resulting from the strategy.

To see the value of her RRSP account in 10 years, for both spreadsheets, find the account under the Capital section that corresponds with her RRSP account (Registered Accounts). Click on this row, and then scroll over to column that lists the year 10 years from now. The box that shows the crossing of this row and column shows the value of her RRSP (and any other registered accounts) for that year. Record the value.

Repeat the exact same steps for the Long Term Cashflow – Model and note the difference.