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PLEASE NOTE INSTRUCTIONS BELOW

-Write your name and student ID above.

-Save the file to upload as: last name plus student number (example: Parla855555)

Note: the file name will automatically change to a numbered file once uploaded; this is normal.

-This is an individual assignment, to be completed by you alone.

-There are 13 pages to this Case including the cover page – please ensure that you have all 13 pages.

-Case 1 consists of two sections.  Answer:

Section I: respond directly on the Case and highlight as well as underline your response to the multiple-choice questions.

Section II: respond directly on the Case in the space provided for each Mini-Case question.

-You may submit your solution in English or French; acceptable submission formats include Word (.docx or.doc) or PDF. EXCEL is NOT accepted.

-Ensure that all responses with calculations are to two decimal places.

-Tables can be found at the end of the Case to help respond to the tax and Time Value of Money (TVM) questions. Outside research/sources will be required.

This Case is 25% of your grade.

For marking purposes only:

Section I:   Ten (10) Multiple-Choice Questions (10 marks - 1 mark each)     

                    Highlight and underline your response.

1)      Tom graduated in civil engineering from Concordia two years ago and decided to work in the remote area of northern Quebec. He is making great money and saving it all. What is Tom’s average rate of tax if in 2019 he paid taxes of $57,132.74 on his gross income earned of $150,000? (ignore Non-Refundable Tax Credits, Quebec Abatement, and any employer withholdings)  

a)      33.29%

b)      49.97%

c)      29.35%

d)      38.09%

e)      38.76%

2)      Chun is ready to apply for a credit card and noticed that all credit cards are compounded daily (365 days per year). In trying to compare credit cards, Chun saw that the Bank of Montreal credit card’s nominal interest rate was 24.9%, while CIBC’s was 25.5%. She then noticed that the Bank of Nova Scotia’s credit card had an effective interest rate of 27.36%. She is looking for the lowest interest rate in case she cannot make a credit card payment on time. Which credit card(s) would you recommend Chun apply for? (round to two decimal places)

a)      CIBC’s credit card

b)      Bank of Nova Scotia’s credit card

c)      Bank of Montreal’s credit card

d)      Either the Bank of Montreal or Nova Scotia’s credit card as the interest rates are equivalent

e)      Either the CIBC or the Bank of Nova Scotia’s credit card as the interest rates are equivalent

3)      Shaun turned 20 on July 1, 2020 (resident of Quebec). His Aunt Mathilda gave him a lottery ticket which turns out to be a winning number where he won $20,000! He decided to put the money in a Tax-Free Savings Account (TFSA). He is however not familiar in how it works; he just knows that one of his buddies made a lot of money in his TFSA! He is wondering what the maximum TFSA contribution could be into his newly opened TFSA account. Any amount remaining, he would like to contribute it to his Registered Retirement Savings Plan (RRSP).  Know that Shaun has never worked in the past and with COVID-19, he is still out of work. (see Table C and D)

a)      Shaun can contribute $12,000 to his TFSA and can contribute $8,000 to his RRSP.

b)      Shaun can contribute $17,500 to his TFSA and can contribute $0 to his RRSP.

c)      Shaun can contribute $6,000 to his TFSA and can contribute $14,000 to his RRSP.

d)      Shaun can contribute $20,000 to his TFSA.

e)      Shaun is not able to contribute to his TFSA nor his RRSP.