Practice NAR FS Unit: Version B

Financial Case Study

  1. Two parents, 42 and 47 live with their 2 children. One of the parents works full time and earns £22 365 net annually. The other parent works part time and earns £10 400 net annually also.

They are currently entitled to the following tax credits and benefits.

Benefit Income / Amount per year
Tax credit / £2400
Child Benefit
(£87.96 per month for the eldest child and £58.06 for each additional child) / £1752.24
Housing Benefit / N/A
Total Entitlements / £4152.24

The table below shows all household expenditure each month.

Outgoings / Amount
Mortgage / £1068
Gas/Electricity / £150
Council Tax / £240
TV/Phone/Internet / £51
Home insurance / £38
Food / £340
Travel / £190
Savings / £100
Activities/Clubs / £400
Childcare / £840
  1. Using the above information, calculate the total monthly household income and expenditure.

Income per month / Amount
Salary
Tax Credit
Child Benefit
Housing Benefit / N/A
Total Income
Total Expenditure
  1. Given this information, write a statement to describe the financial position of the household indicating whether there is a surplus or a deficit and by how much.
  1. The parents had an old savings account and they decide to move £3100 into a better savings account. Looking online, they found different options for their savings,
  2. Calculate the interest on the money in each savings account option in the table below.

Bank / Interest Rates / Interest Paid
National / 2.66%
Bonus of 0.67% if invested for the whole year.
Taxed at 15%
Global / 3.1%
Taxed at 20%
TBS / 2.2%
Tax Free ISA

* The bonus is only paid if the money is invested for the full year without any withdrawals.

  1. How would you advise them with regard to their savings, if they want to withdraw at least £500 during that year?

Use calculations to justify your advice.

  1. They plan to book a holiday abroad to visit friends in either Denmark or Switzerland.

An apartment is available in both places and the rental cost for 1 week is as follows in the currency of the country that they want to visit:

Apartment Size (persons)
2 / 3 / 4 / 5
Copenhagen
(Denmark DKK) / 6072 / 7286.40 / 7994.80 / 8602
Zurich
(SWITZERLAND CHF) / 867.30 / 911.40 / 1102.50 / 1131.90

*In Copenhagen, tourists are taxed 3% of their accommodation above the stated costs.

On this particular day, the exchange rates were

Currency / Code / Exchange Rate
Danish Krone / DKK / 10.12
Swiss Franc / CHF / 1.47

Which location is best value for money for accommodation?

  1. The family decide to take out a loan to buy a new car costing £7000, as the old one is costing too much in repairs on a month to month basis.

Their bank offers the loan with a fixed rate of 3.6% per annum simple interest. The repayment options are as follows:

Term / Monthly repayments
Option 1 / 3 years
Option 2 / 4 years
Option 3 / 5 years
  1. Calculate the monthly repayments required for each loan option.
  1. They choose to repay the loan over 5 years but would like to repay only £140 per month.

How much of a deposit would they need to pay to reduce their monthly repayments to this value? Use your calculations to justify your answer.

  1. The parents are interested to find out how the weather affects the gas usage each month.

They gather the required information (unfortunately their bill for September has gone missing) which is presented in the table below.

Month / Average Temperature (Celsius) / Gas bill (nearest £)
January / 1 / 42
February / 2 / 39
March / 4 / 38
April / 5.5 / 31
May / 11.5 / 27
June / 13 / 27
July / 19 / 21
August / 17 / 23
September / 12
October / 5 / 34
November / 7 / 31
December / 3 / 41
  1. Plot this information on a scattergraph.
  2. Draw a line of best fit on your scattergraph and use it to estimate their gass bill for June.

They check the year before and they have provided the data for a comparison.

Month / Average Temperature (Celsius) / Gas bill (nearest £)
January / 2 / 46
February / 2 / 44
March / 6 / 36
April / 11 / 31
May / 14 / 25
June / 11 / 29
July / 21 / 17
August / 19 / 16
September / 6 / 39
October / 4 / 37
November / 2 / 45
December / 1 / 48
  1. Draw a second scattergraph to show this data. Draw a line of best fit and use this to estimate the bill in a month when an average of 5 degrees Celsius is recorded.
  2. Compare the 2 scattergraphs and make a comment about how the energy costs compare in the different years.
  1. The average temperatures in the second table are listed below

2 / 2 / 6 / 11 / 14 / 11 / 21 / 19 / 6 / 4 / 2 / 1
  1. Make a five figure summary of this data.
  1. Calculate the Mean and standard deviation of these temperatures

c. The Mean temperature for the first table is 8.3 degrees Celsius, and Standard Deviation is 6. Write a statement comparing the mean and standard deviation of the average monthly temperatures in those years.