CONFIDENTIAL BAJUN 2019/FIN533/654/663 UNIVERSITI TEKNOLOGI MARA FINAL EXAMINATION COURSE PERSONAL FINANCIAL PLANNING/PERSONAL FINANCE, COURSE CODE : FINS33/654/663 EXAMINATION : JUNE 2019 TIME : 3HOURS INSTRUCTIONS TO CANDIDATES 1 This question paper consists of two (2) parts PART A (1 Question) PART B (5 Questions) 2 Answer ALL questions from PART A and any three (3) questions from PART B in the ‘Answer Booklet. Start each answer on a new page. 3 Do not bring any material into the examination room unless permission is given by the invigilator. 4 Please check to make sure that this examination pack consists of i) the Question Paper ii) a one ~ page Appendix i) an Answer Booklet ~ provided by the Faculty 5 ‘Answer ALL questions in English, DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO This examination paper consists of 6 printed pages (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL 2 BA/JUN 2019/FIN533/654/663 PARTA QUESTION 1 Syed Tariq has just divorced and left his four children with his ex-wife. With a take home pay ‘of RM5,500 monthly (after deduction of tax and EPF of 11%), he needs to provide RM250 monthly to each of his four children as financial support ordered by the court during the divorce. Currently, he has the following obligations to pay with regards to loans: Debt Current Balance | Credit Limit | Interest Rate Minimum Monthly. Payment __ (RM) (RM) | (RM) Credit Card #1 500 5,000 18% 100 Credit Card #2 ‘500 5,000 18% 200 ‘Auto Loan (Honda) 28,000 nla 2.8% 550 | Housing Loan 80,000 nla 4.7% 850 Personal Loan 22,000 nla 4.5% 500 The followings are Syed Tariq’s other financial information for the year ending 31 December 2018. Items RM Saving account #1 _ 5,200 Saving account #2 3,500 Monthly tuition fee (per child) - 120 | ‘Amanah Saham balance as at 31 Dec 2018 — 7,800 Monthly utilities cost 200 Netflix (premium package) per month - 51 Celcom bill overdue __ 720 ‘Market value of Honda 35,000 Investment in Public Mutual unit trust — 25,000 | Market value of house 140,000 Insurance premium per year _ 1,200 Household furniture current value — 5,800 Yearly vacation expenses _ 5,000 Purchase Panasonic Smart Fridge on December 2018 4,800 Monthly fuel expenses 450 Groceries per month 300 Cash in hand — 7,200 | Zakat per year _ 450 | ‘Syarikat Air Selangor accrual _ 300 Current value smartphone purchased in 2017 2,500 Monthly leisure and miscellaneous _ 360 Balance borrowed from a friend and due in January 2019 500 © Hak Cipta Universiti Teknologi MARA. CONFIDENTIALCONFIDENTIAL, 3 BA/JUN 2019/FIN533/654/663 Syed Tariq plans to save 10 percent from his take home pay salary starting January 2019. Based on the information, you are required to assist Syed Tariq on the followings: a) Construct a Balance Sheet statement as at 31 December 2018 for Syed Tariq, (15 marks) b) Construct a Cash Flow statement for the year ended 31 December 2018 for Syed Tariq (10 marks) ©) Calculate and comment on the financial ratios to assist Syed Tariq in his financial planning based on the statements constructed in (a) and (b) above. i) Current Ratio Liquid Asset to Take Home Pay Ratio iil) Debt Ratio iv) Debt Service Coverage Ratio. (5 marks) d) Outline five (5) suggestions that will help Syed Tariq to fulfil his objective to save 10 percent from his take home pay starting January 2019. (5 marks) €) Briefly explain any two (2) common budgeting mistakes. (6 marks) @ Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL, 4 BA/JUN 2019/FIN533/654/663 PARTB QUESTION 1 2020 Mr. Shah is currently in the process of preparing his 2O4@ tax return. He has been able to determine the following items concerning his income and possible deductions, His wife, Mrs. Fika, is handicapped and has no income for the basis year 2018. Details of their children are as follows: a) Alia, 1 year old and is sent to a registered child care centre with a fee of RM350 a month b) Alisha, 9 years old and is in a primary school ¢) Amira, 18 years old and is undergoing an A-Level program at SEGi University d) Amina, 20 years old, handicapped and is in her third year of Diploma in Investment Analysis at UiTM e) Amani, 23 years old and is in the final year of Bachelor of Business Ac uPM \dministration at f) Amelia, aged 24, is married with 2 children. She is presently studying for her MBA offered by UKM Additional information on Mr Shah's income and deductions are as follows: Items RM ‘Annual Salary 63,000) Life insurance for Mrs. Fika | 7,800] EPF contributions — “5,200 Children education fees __ 14,000 Medical insurance for spouse and children _ 2,500] Donation to YAPEIM TE 400] Mr. Shah's parents’ allowances - 4,600 ‘Textbooks for children —_ 1,000] Purchased iPad Mini 4 __ 1,700} Rental income received 14,600 Expenses incurred on rental 1,400} Mr. Shah purchased a breastfeeding equipment for Mrs. Fika 880| Education insurance for baby Alia per month _ 170: Children SSPN deduction per month 250} Withdrawal of SSPN in 2018 - 2,000 Zakat _ 400 _ 150. Compute the income tax payable for Mr. Shah for the year of assessment 2018. (20 marks) © Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 5 BAJJUN 2019/FIN533/654/663 QUESTION 2 a) You have received your credit card statement for the period beginning 15 March to 14 April 2019. The interest rate charged by Nat East Bank is 18 percent per annum and the monthly minimum payment is 5 percent. You want to verify the monthly finance charges and the details of the statement are stated below. Date Items. if March 15 Previous Balance Z 5300 March 17 Purchase shoes at Zalora online store 250 ‘March 20 Petron Gebeng 130 ‘April08___| Payment (Internet Banking) 600 April 08 Purchase clothes at Fashion Valet online store 690 April 08 MAS retum ticket to Langkawi 340 April 10 Purchase printer at Harvey Norman store 300 ‘Shell Batu Burok 150 Purchase Midea Vacuum at Lazada online store 260 Payment (Internet Banking) 4,000 ‘Compute the following, using average dally balance, including new purchases. i) Average daily balance ii) Interest charge iii) Outstanding balance iv) Minimum payment v) Outstanding balance after minimum payment. (10 marks) b) Though people often use the names interchangeably, credit cards and charge cards are actually different. Explain the differences between credit cards and charge cards. ( marks) c) Investment risk can be defined as the probability or likelihood of occurrence of losses relative to the expected return on any particular investment. State four (4) components of risk factors affecting the choice of investments. (6 marks) QUESTION 3 a) Ziana had to undergo a major heart operation at Sihat Hospital. She was charged by the hospital amounting to a few thousand ringgits. The following are her hospital bills and medical insurance coverage amounts. item Etika Insurance Berhad Coverage | _ Hospital Surgery RM 10,000 RM 12,000 Doctor RM 6,000 max RM 7,000. Hospital Room M250 max per day with a total of _| RM 320 per day for RM 6,000 per year 20 days Medical supply and | Reasonable amount paid in full RM 3,500, CT-Scan _ (© Hak Cipta Universiti Teknologi MARA CONFIDENTIALCONFIDENTIAL 6 BA/JUN 2019/FIN533/654/663 Ziana has recently paid RM 1,800 for one-year insurance premium to Etika Insurance Berhad. Compute the total medical cost, the amount covered by the insurance policy and Ziana's share of the cost of her treatment (excluding the yearly premium). Discuss and comment whether it is a good decision to take up such medical policy offered by Etika Insurance Berhad, (10 marks) b) There are many types of insurance products in the market catering to different financial needs and one of it is investment linked insurance. Explain briefly four (4) benefits of investment linked insurance. (5 marks) ©) According to Islamic perspective, the deceased next of kin must undergo certain procedures before the deceased’s assets can be distributed to the beneficiaries. Briefly explain the procedures before the deceased's assets can be distributed. ( marks) QUESTION 4 a) Retirement is something that is easy to put off and worry about later, especially when you are young. Explain five (5) reasons on the importance of retirement planning. (10 marks) b) A unit trust is a form of collective investment constituted under a trust deed. Determine five (5) advantages of unit trust. (10 marks) QUESTION 5 a) Liana aged 36, decides to buy a house that cost her RM300,000 with 70 percent financing from a bank. She also plans to make an investment into a local unit trust scheme, Currently, Liana has savings balance in EPF account 1 and account 2 of RM70,000 and RM150,000 respectively. Compute the new balance of each EPF accounts if she decides to withdraw them for unit trust investment and house purchase. (EPF Basic saving for the age of 36 is RM55,000) (10 marks) b) By not writing a will, you would not be able to distribute the assets according to your wishes after your death. Instead, the state shall define who would actually benefit from your death. Briefly explain five (5) reasons some people have yet to write any will. (10 marks) END OF QUESTION PAPER (© Hak Cipta Universiti Teknologi MARA CONFIDENTIAL,CONFIDENTIAL APPENDIX 1 BAJJUN 2019/FIN533/654/663 Marginal Tax Rate Assessment Year 2018 RANGE OF COMPUTATION RATE TAX CHARGEABLE INCOME RM % RM 05,000 First 5,000 ° ° sim oem |: | & 20001-9500 7 » |g won-woom | gereae |g | er a 70,001 = 100,000 Res 0.000 24 6300 100,001 ~ 250,000 Nexiteg ood 24 ra900 | 250,001 - 400,000 net ‘e0 24.5 pare 400,001 - 600,000 fist pon and 25 50,000 600,001 ~ 1,000,000 nexrace ood 26 had oon Exceeding 1000.00 | por very new ng we Rr © Hak Cipta Universiti Teknologi MARA CONFIDENTIAL