AFIN2000 Principles of Financial Literacy

2022 Session 1

Final Exam – Part B Short Answer Questions

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Two questions. Total 45 marks.

Each question has multiple parts. The mark allocation for each part is shown.

Make sure you answer ALL parts of ALL questions.

The questions refer to the Case Study provided with this Final Exam paper.

As appropriate, make sure your responses are related to the Case Study information.

Question 1: (total 22 marks)

Question  1.a  (6 marks)

Marion has requested your advice in relation to her goal of continuing to self fund her

retirement. Marion is aged 65 and, for planning purposes, expects to continue as a self

funded retiree for another 30 years.

Marion has identified two key issues for you to address:

Issue 1: Estimated duration of existing superannuation

Calculate the number of years the current superannuation fund amount of [AUD600,000] will

support a net income requirement of [AUD75,000] per annum. Assume the net income

requirement does not change and the fund generates a constant return of 5% per annum.

Ignore fees and taxes. Show your answer in years to one decimal place (for example, 10.2

years). (3 marks)

Issue 2:Estimated superannuation requirement to support 30 years

Calculate the required superannuation fund amount to support a net income requirement of

[AUD75,000] per annum for 30 years. Assume the net income requirement does not change

and the fund generates a constant return of 5% per annum. Ignore fees and taxes. Show

your answer in millions to one decimal place (for example, AUD2.1 million). (3 marks)