- Question 2 Managing Your Personal Finances Part A Ross Needs To Save R 11 000 By 1 April 2021 In Order To Buy New Tyres 1 (127.61 KiB) Viewed 36 times
ICB book
South Africa
QUESTION 2 MANAGING YOUR PERSONAL FINANCES PART A Ross needs to save R 11 000 by 1 April 2021 in order to buy new tyres for his car. His savings account has a balance of R 3 000 as at 1 January 2021 (the current date). He is an assistant at an upmarket clothing store, and works 4 shifts of 6 hours each in the week, and 1 shift of eight hours on weekends. His standard weekly wage amount is R75 per hour. Weekends he is paid an hourly wage of R100. Ross also works as a freelance web designer and on average earns R 4 000 per month. Ross stays in a one-bedroom flat near Cape Town. His expenses are as follows: Expense item Amount Rent R 3 500 per month Groceries R 2 400 per month Car payment R 2 500 per month Fuel R 800 per month Clothing accounts R 400 per month Insurance. R 600 per month Entertainment R 1 100 per month Ross also needs to purchase a new microwave oven for R 1 000 in March 2021. For the purpose of this exercise, we will assume four weeks in each of the months. Required: Prepare a monthly cash budget for January 2021 March 2021 to determine whether Ross will reach his stated objective. PART B 1. Explain the difference between savings and investing. 2. List five reasons why you should invest towards your retirement. 3. An investment has the following growth distribution: 5% dividends (assume exempt from tax), 7 % interest and 12 % capital gains (equity growth). Assuming a marginal tax rate of 41 %, assume a 25% inclusion rate for capital gains, calculate the net investment return (in percentage terms).