Investable assets question when computing required return computing, inherited, question, required, anything

jim8z3

Schweser SS16, page 173
“Client inherited $1 million”, also has $55k in cds, checking account.
When they go and calculate return,
FV = - college expenses,
Pmt= - travel expenses,
PV = $1 million,
Why dont the use the $55k? I thought for investable assets, the $55k would be inlcuded. There is no mention about not using the $55k in the question , or anything that ties it to the house etc ( house not to be included in investable assets).
Anyone know why ?

Unforseen

You got to bump it up

cmacedo

IH8, don’t have the book at the office, when are they planning on travelling and do they say anything about any sort of cash reserves they’d like to keep?

Kingpin804

You are getting no replies because nobody can answer the question.
There are other threads on this with no good conclusions.

malbec

I sort of remember this question and assumed that CDs are effectively cash and so they are part of the “emergency cash reserve” along with the checking.

cchang

Maybe the 3-6 mths cash reserve you’re supposed to have on the side. doesnt everyone have like 55k cash in the bank for a ‘rainy couple of months’???

JonnyKay

I thought of this point too …. but in this case her annual living expense were only 26K so 55K is way more than 3-6 month reserves.

therecruit

I’ll give Greg Philbeck a ping on the blackberry.
ummm, I strongly DOUBT we would lose marks for including that as investable aseets since there was NO statement of any immediate use of funds or emergency reserve etc.
its liquid therefore investable.
godspeed

brazilatz

FSA,
The only thing I though of was it was in CDs (penalty to withdraw) and checking (needed for everyday expenses).
Run that by him if you don’t mind.