1. C o m m u n i t y 4 : D a n C a p p i e l l o , D o m i n i c k M i t c h e l , L a c h l a n D a v i s ,
K y l e J e n n i n g s , C a s s o n d r a T r a c e y , M a r k G a l l a n t 0 3 / 0 3 / 1 4 P a g e | 1
Individual Response
For this project I ended up actually being the leader and I say “ended up” because at first I did not
see my role that way when we started this project. This is rather strange for me as I usually am first to
jump at sight of leadership however, because finance wasn’t always one of my strong suits I was willing
to lay low at first and play a team members part as opposed to a leader. This showed me a side of work
ethic that I usually ignore, humility. Where I recognized that perhaps I wasn’t the best to lead this project
at first and that I was better suited to listen and learn from others as opposed to just offering up my
knowledge. However,as class went on and meetings ensued I soon found myself more and more
interested in the topic (which I never would have imagined from the start). Eventually it got to the point,
at the third group meeting, where no one had stepped up to the part yet and had my interest peaked (no
pun intended). So I asked my group members if they would mind if I stepped up as leader for this project
and no one seemed to have any qualms with it. For some reason, understanding, or rather the lack of
understanding, had made me want to dive deeper into the subject of long term shareholder wealth
maximization (LTSHWM). Where in the beginning I kept asking myself “Why not buy the house straight
up? Why not save all the money that would otherwise be spent on interest over the years?” Then as
classes went on I started to realize that because we hadn’t spent everything on the house, not only were
we able to rent out the house in the mean time to make money, the extra cash our team had left over could
be used in a number of ways. Whether it was storing it in a bank to accrue interest for us, purchasing
more properties to increases our teams’ equity, or using it to build more intrinsic value for our company
(ie: by offering our clients privileges that we otherwise would not be able to offer). Since this concept was
so new to me, it had me enveloped in its possibilities, I wanted to know how and why these possible
scenarios played out and in a way it became my hedgehog concept. Where I wanted to have as much
knowledge on the subject of LTSHWM as possible or until I had a firm grasp on everything the concept
could help our team with in this project. I truly believe that this unexpected passion helped drive me and
my team in creating and completing the concepts and parts of this project. Eventually, I could see the
wheels in every one of my teammate’s heads turning and starting to grasp the real world concepts that this
project was teaching us. I first started to notice this after team meetings stopped being about just getting
the work done and started being about understanding what the work was about and what it was trying to
teach us. This was an extreme turning point in our project as what could have been our teams doom loop
(just trying to get the work done meeting after meeting, undeniably resulting in unlearned concepts)
quickly became our team’s flywheel concept. This form of thinking without a doubt became our teams
flywheel concept because as opposed to of focusing on the short-term thinking of ‘just getting the work
done’, it was soon realized that with a little more thought (i.e. long-term thinking) our team started
thinking about the backbone of this project and how the parts intertwined to make the data become more
than just numbers, but real world examples. With all this new found knowledge, the learned humility, and
the drive created through the concepts I truly believed that I was able to advance to level 5 leadership in
this project. Thus, when we created our teams’ brutal facts and data for the project they provided deeper
thought than the usual answers,showing that both time and understanding were the building blocks
behind our ideas rather than following logic and objectives.

2. C o m m u n i t y 4 : D a n C a p p i e l l o , D o m i n i c k M i t c h e l , L a c h l a n D a v i s ,
K y l e J e n n i n g s , C a s s o n d r a T r a c e y , M a r k G a l l a n t 0 3 / 0 3 / 1 4 P a g e | 2
Differences between Intrinsic and Market Values
When a Stock Bubble is Being Formed:
Often times, a difference between intrinsic and market value will lead to a stock bubble being
formed. While market value may be rising, there could be many problems arising internally. These can be
unintentional, but they can also be due to illegal activities. A lack of knowledge about a certain industry
can also lead to a bubble being burst, which is often the case with new technology. Many companies that
came out during the internet boom ended up bursting within a few years. Stock prices initially rose very
high at the initial public offering because investors believed that the new technology would instantly
become a new way of life, but in reality, internal business practices were poor and the companies lost
money. Eventually, stock prices plummeted and the companies were bankrupt just a couple years later. A
case where illegal activity led to a stock bubble was the Bernie Madoff Ponzi scheme. Madoff reported
incorrect numbers for years,which caused people to continue to invest under false pretenses. When
Madoff was caught, it was revealed how much money his investors actually lost and how much he was
stealing.
Where there is a Unique Buying Opportunity:
There is a unique buying opportunity that also occurs when the market value differs from the
intrinsic value of a company. This usually happens when a company’s stock price is introduced to the
market at a low price (most likely due to low demand for the stock). But when a trader sees a high
intrinsic value of a company it raises the potential of the company stock, whether it be in terms of
steadiness, room for potential growth, cost-effectiveness, or how lucrative it looks. For this reason stocks
can be bought cheap at market price and be held on to until there price rises. This unique buying
opportunity only occurs when a trader/investor realizes the differences between the market and intrinsic
value. This creates a chance for investor for a large profit at a small risk which is why these types of
opportunities are so sought after.

3. C o m m u n i t y 4 : D a n C a p p i e l l o , D o m i n i c k M i t c h e l , L a c h l a n D a v i s ,
K y l e J e n n i n g s , C a s s o n d r a T r a c e y , M a r k G a l l a n t 0 3 / 0 3 / 1 4 P a g e | 3
Chosen Venue
38 Vanstone Ave, Warwick, RI
02889
3 Bedroom
2 Full Bathrooms
7,007 Sq Ft Lot
Built in 1988
Asking Price: 129,900
Sebonic Financial
Estimates:
30yr fixed payment
4.375% Interest Rate
4.456% APR
Down Payment: 25,980 (20%)
Monthly Payment: $519/mo
Expense Monthly Cost Yearly Cost
Property Tax $142.00 $1,704.00
Homeowners Insurance $91.00 $1,092.00
Housing Utilities $650.00 $7,800.00
Food $250.00 $3,000.00
Car Insurance and Gas $200.00 $2,400.00
Healthcare $300.00 $3,600.00
Miscellaneous/Entertainment $100.00 $1,200.00
Total $1733-$2000 $18,096-$19,000

4. C o m m u n i t y 4 : D a n C a p p i e l l o , D o m i n i c k M i t c h e l , L a c h l a n D a v i s ,
K y l e J e n n i n g s , C a s s o n d r a T r a c e y , M a r k G a l l a n t 0 3 / 0 3 / 1 4 P a g e | 4
Refined Concepts
Doom Loop- To avoid the negative result of doom loop, we will assign specific roles to each member.
Each member will then focus on only his/her part to the best of their ability whether it be only focusing on
researching background information, creating a balance sheet/income statement,calculating return on
investments, etc. In order for a team to function to the best of its ability, each member must do their job.
We will make it clear throughout our team that you are to take care of your part and that part only. In
order to maintain good contact with our clients we create a weekly schedule in which we will call our
clients, as well as setting automatic email responses to all clients to assure them all messages have been
received and will be replied to as soon as possible if not immediately.
Hedgehog Concept-Our group would like to thrive in the industry and realize that if we’re not willing to
be the best, we are wasting our time. For us, carefully keeping track of payments and balances will ensure
that everything is flowing smoothly. By doing this, possible clientele will be more inclined to do business
with us because of our reliability and meticulous work habits. If we slack off or lose our drive to become
successful, we will end up going through the motions and may end up making mistakes, which would hurt
our business.
Flywheel Concept- As individuals we will have to work on our specific given tasks and break them down
in order to accomplish a satisfying end result. We can break down objectives week by week and in the
end we will be a better functioning team that will accomplish more. If we are able to practice good
bookkeeping every day, in the end we will be financially better off. Making sure we have our numbers
correct and up to date does not only create good habits but it will be the key to our success to avoiding the
doom loop. As we complete these small tasks on a day to day basis acts for more than just accurate data,
this action overtime will eventually increase our companies credibility and (perhaps even more
importantly) the overall satisfaction of our clientele.
3. One of the best ways to maintain conscious relationships with our prospective clients is through
relationship marketing. This includes marketing efforts such as campaigns, public relations, and social
media. Relationship marketing is the best way to emphasize customer retention and satisfaction. To
reach potential clients, we plan on publishing advertisements online and in newspapers to advertise the
rental and get customers attention to the property. Other ways to reach customers include promoting the
listing through social media outlets such as Facebook or Twitter, and the use of public relation
methods. Networking is another important way to gain customers. By attending other events in our
market or studying other rental listings can help us tailor specifically to our client’s needs. By doing this,
we can increase our customer valuation and determine which relationships to invest in further. By

5. C o m m u n i t y 4 : D a n C a p p i e l l o , D o m i n i c k M i t c h e l , L a c h l a n D a v i s ,
K y l e J e n n i n g s , C a s s o n d r a T r a c e y , M a r k G a l l a n t 0 3 / 0 3 / 1 4 P a g e | 5
satisfying our customers, we can get repeated business from them which is a means of maximizing our
profits and cash flow.
Compared to a 2-year CD:
Ally bank is offering a 2-year CD with a 1.10% annual return rate. Ally bank offers a very
competitive rate on their CD’s and overall it would be a good way to grow the money we have. Any
deposits we make to Ally Bank are covered by the FDIC (Federal Deposit Insurance Corporation).
Depositing in this CD would entail relatively low risk compared to our venture of investing in a
household. The downside to the CD is that we wouldn't be making a lot of money, 1.10% annual return
won’t make us as much money as this project will. Irrespective of advertizing and other initial startup
costs we will be making $3,696 with our 30% markup of our breakeven. This investment is a very good
way to make money however there is a riskiness factor that we must understand. Putting our money in
this house is riskier than depositing in Ally’s 2-year CD. We must do a cost-benefit analysis between
riskiness and annual return. If we are able to stay on track with our objectives (that will minimize risk) it
would be a better option to invest in this project.
http://www.ally.com/bank/raise-your-rate-cd/?CP=105250577;0
Corporate Structure:
For our company’s corporate structure we decided to form an LLC, a limited liability corporation. This
structure would best suit our company because in a LLC, your personal assets are split from your
company assets. For instance, if someone who purchased a house from us decided to sue us, all of the
members of our company’s personal assets would be safe. Limited liabilities corporations are also the
easiest to form due to the fact that you only need to file an Articles of Organization with your state and
then you can officially become a limited liability corporation. This business structure is favorable in the
fact that they can be taxed as a sole proprietorship. This is a benefit for our federaltaxes because it means
the company does not need to pay any taxes on profits. In the end, an LLC corporate structure would be
best for our real estate company because forming an LLC will help to protect our investments and each of
our personal assets/property,and it allows us to gain flexibility in how we are taxed.