The Voorts received a lump-sum of $10m at the end of last year/beginning of this year.
Why do you not take into consideration this large $10M received at the beginning of the year when determining their liquidity needs?
The answer key subtracted their retirement income from the living expense to come up with liquidity requirement, so they are combining income and expense to come up with a net number needed for liquidity.
If they also took the 10M into consideration, then their liquidity needs are 0 if you go with the same logic of netting income and expense.
I’ve seen multiple questions where the needs are only concerning the outs and don’t take in consideration the ins.
My concern about this question is more about the taxes, they have a tax expense on the 10M from the sale of the business that has to be paid in that given year, why isn’t that part of their liquidity needs?
I came across the question as well and thought the same - particularly the point on the tax expense. I’m not quite sure how it’s not considered part of the liquidity requirement