BLOU23 Wrote: ------------------------------------------------------- > current, but they will grow w/ inflation. so have > to factor in for next yr again, I believe all data in the table was presented for the first year in retirement. at least that is what i remember reading.
The expenses were 125k starting in 2010. mortgage was 100k net of taxes. I just looked thru cfa readings, cfa essay 2006-2008, schweser practice exams vol 1 and 2 and could net find an exact example of a pre-tax nominal situation like this. There are many nominal after tax and some pre tax but in those examples the expenses and salary were indexed some how with inflation and the example didn’t show an inflation adjustment and tax adjustment. Does anyone remember seeing a specific example of pre tax nominal return?
nikko0355 Wrote: ------------------------------------------------------- > my question said after tax. thus i didnt divide > by .80. maybe there were different wuestions > > my question said after tax nominal return I had after-tax as well. Took it in Metropolitan Ballroom. NYC
anishcandy Wrote: ------------------------------------------------------- > nikko0355 Wrote: > -------------------------------------------------- > ----- > > my question said after tax. thus i didnt > divide > > by .80. maybe there were different wuestions > > > > my question said after tax nominal return > > > I had after-tax as well. Took it in Metropolitan > Ballroom. NYC After-tax in Los Angeles. I didn’t know they did multiple versions…
MOPAHT Wrote: ------------------------------------------------------- > 9,84 - for sure. > > 1. After tax > 2. Before tax > 3. Nominal return > > that’s right order Then I go celebrate
were the living expenses current or projected for 2010?
projected
mhannebert Wrote: ------------------------------------------------------- > 125 - 80 = 45 in today’s CAD > 45 * 1.04 = 46.8 year > > 1100 year > 100 1000 > 46.8 / 1000 = 4.68 % 4.68% + 4% = 8.68% 8.68% / (1-20%) = 10.85% tax > > 10.85% is my answer. Not very popular if I read > yours… > > MH i got the same answer…
gemini76 Wrote: ------------------------------------------------------- > BLOU23 Wrote: > -------------------------------------------------- > ----- > > you sure they didnt say it was current living > > expenses? > > > I remember the table stating figures were for 1st > year of retirement or 2010. Which would make > sense because the income was pension income, which > you would not receive unless you were retired… > > My memory could be bad, but that’s what I remember > reading. in one of the schwezer readings, it explicitly stated that expenses are generally quoted after adjusting for inflation…having this in mind i did not adjust… i think i screwed assuming schwezer was right…crap
i had 10.85% originally, but then revised to 5.65% after taking the expected return 4% on the portfolio into consideration.
tomkwong Wrote: ------------------------------------------------------- > cdogstu77 Wrote: > -------------------------------------------------- > ----- > > wow i think i really screwed this one up. what > > about the 4% return on the portfolio? didn’t > you > > guys include that, because i ended up with > answer > > including inflation of 6.3% > > > Yeah I think that got to be included. My memory > didn’t work well after the exam… I don’t know > whether I included that… hahahah! You see, I did this too! I included the return of the portfolio for the upcoming year. With the after-tax income from the portfolio, they would only need 13,000 from the portfolio to make up the gap. Got me to a 6.625% return. Kinda made sense to me because their objective was only capital preservation.
sct123 Wrote: ------------------------------------------------------- > 10.85 using mutiplicative??? this is what i got
Definitely asked for before-tax (circled it before I even started)…shocked as they haven’t typically asked for the before. Add me to the 10.85 club. Info given was expected, not current, so you didn’t have to multiply it by 1+inflation.
only the pension income and expenses are indexed to inflation, the shortfall is subject to inflation, this inlation would be added to the shortfall (eg the required return) to meet expenses
i got 10.85 too except I actually got 10.65 (I used arithmetic and not geometric.)
I got 10.85 too but i made the mistake of changing it and adding 20k in taxes due to the first withdrawal from the portfolio (the 100k withdrawal) so it ended up being like 13% or something. I guess it was already included in the 100k…damn
I made the mistake of using 980,000 asset base. 100,000 withdrawal, I really could not figure out whether that included taxes or not, it said to pay off mortgage and taxes owed, are these taxes the same tax as the 20% on withdrawal? Just bit the bullet and decided to add 20% to that. 20% of 100,000 is 20,000 so I farked up on that, should’ve been 100,000/0.8…argh. Then again I probably should’ve used 1 mill for asset base. My answer was still 10. something. Took exam in Hong Kong.
I agree… it was shortfall of CAD 45,000 / 1,000,000 (value of the pf) = 4.5% inflation was 4% 1.045*1.04/(1-.2) = 10.86%
i f’d this up because i inculded the 4% TIPS return. cfasf—i’m not sure how many points we lose on this.
It was 10.85 Short fall 45000 was not adjusted to inflation specifically said expenses would be 125000 on retirement date (straight forward) portfolio value will have grown to 1.1M on retirement date ( portfolio return figure was a decoy because it was not needed) (45000/1000000)+1 *(1.04)-1 = 8.68 after tax 8.68/0.8= 10.85. I believe that was the correct answer.