Guaranteed Return
Mr. Juan Tobias Rich (Toby to his friends) has recently inherited$50,000 from the estate of his
great-aunt. He has never had capital to invest before, so he is not quite sure what to do. His
friend Mr. Richard Stuffy is an investment counselor for a local stock brokerage firm, Bullfinch
and Bearwallow. In their initial talk, Toby said, “I want to invest the entire inheritance, but no
more now. I am living very well on my salary, and I really have no need for the money in the
near-term. My goal is to combine this with a good chunk of my future raises, so that I can retire
early— in 25 years or so.” Richard believes Toby will follow his savings plan. Toby in two years
saved enough for the down payment on a house, which he purchased last year.
Toby’s capital is too limited for many forms of independent investment. On the other hand, his
possibilities go far beyond a certificate of deposit or a few shares of stock. As is normal practice
with new clients, Richard has developed three distinctly different investment alternatives (in this
case, each is for $50,000). Richard uses his client’s reactions to the investment choices to
develop clearer goals for each client’s investment strategy.
The first of these alternatives is the financing of a second mortgage on a commercial structure.
The risk on this investment is relatively low because the loan is secured by the building. It runs
for a 25-year period, with annual payments at a 15% annual rate. The borrower pays the cost of
title and fire insurance as well as the fees to the bank that acts as the intermediary for payments.
The second alternative is the purchase of 25-year bonds issued by the local power authority.
These bonds carry a face rate of 9% with interest paid annually. However, interest rates for this
class of bond have risen in recent years (currently 11%) so that the bonds are selling at a discount
from their face value. The power authority has recently announced some cost overruns on the
nuclear facility that is under construction. In reaction to this news and fearful of more substantial
problems, their bonds in particular are being discounted more heavily—to correspond to a 14%
rate of return. Thus, if the bonds are paid off, this is a rare opportunity, but there is some risk of
default.
The third alternative is as a limited partner in a business run by some friends of Toby and
Richard. The business is a spin-off from a local high-tech firm, which is still in the embryonic
stage. Their friends hope to take the firm public (sell stock and become publicly held) within
three years. At this point, the investor’s capital would be returned with substantial interest.
However, the company may go bankrupt instead. If this happens, Toby can expect to get back
about 20 cents on the dollar. Although many intermediate states are possible, Richard believes
that the two extreme possibilities provide adequate guidance. He estimates that there is a 40%
chance of success and that the or.
Guaranteed Return Mr. Juan Tobias Rich (Toby to his friends) has r.pdfvickyaichslg
Guaranteed Return
Mr. Juan Tobias Rich (Toby to his friends) has recently inherited $50,000 from the estate of his
great-aunt. He has never had capital to invest before, so he is not quite sure what to do. His
friend Mr. Richard Stuffy is an investment counselor for a local stock brokerage firm, Bullfinch
and Bearwallow. In their initial talk, Toby said, “I want to invest the entire inheritance, but no
more now. I am living very well on my salary, and I really have no need for the money in the
near-term. My goal is to combine this with a good chunk of my future raises, so that I can retire
early— in 25 years or so.” Richard believes Toby will follow his savings plan. Toby in two years
saved enough for the down payment on a house, which he purchased last year.
Toby’s capital is too limited for many forms of independent investment. On the other hand, his
possibilities go far beyond a certificate of deposit or a few shares of stock. As is normal practice
with new clients, Richard has developed three distinctly different investment alternatives (in this
case, each is for $50,000). Richard uses his client’s reactions to the investment choices to
develop clearer goals for each client’s investment strategy.
The first of these alternatives is the financing of a second mortgage on a commercial structure.
The risk on this investment is relatively low because the loan is secured by the building. It runs
for a 25-year period, with annual payments at a 15% annual rate. The borrower pays the cost of
title and fire insurance as well as the fees to the bank that acts as the intermediary for payments.
The second alternative is the purchase of 25-year bonds issued by the local power authority.
These bonds carry a face rate of 9% with interest paid annually. However, interest rates for this
class of bond have risen in recent years (currently 11%) so that the bonds are selling at a discount
from their face value. The power authority has recently announced some cost overruns on the
nuclear facility that is under construction. In reaction to this news and fearful of more substantial
problems, their bonds in particular are being discounted more heavily—to correspond to a 14%
rate of return. Thus, if the bonds are paid off, this is a rare opportunity, but there is some risk of
default.
The third alternative is as a limited partner in a business run by some friends of Toby and
Richard. The business is a spin-off from a local high-tech firm, which is still in the embryonic
stage. Their friends hope to take the firm public (sell stock and become publicly held) within
three years. At this point, the investor’s capital would be returned with substantial interest.
However, the company may go bankrupt instead. If this happens, Toby can expect to get back
about 20 cents on the dollar. Although many intermediate states are possible, Richard believes
that the two extreme possibilities provide adequate guidance. He estimates that there is a 40%
chance of success and that the o.
16 Real Estate and High-Risk InvestmentsYOU MUST BE KIDDING, R.docxaulasnilda
16 Real Estate and High-Risk Investments
YOU MUST BE KIDDING, RIGHT?
Friends Nicholas Belisle and Joseph Sanders both have aggressive investment philosophies. Nicholas invests primarily in residential real estate, and Joseph invests in commodities futures contracts. As longtime investors, they consider themselves experts, but occasionally, each has experienced financial losses. What are the odds that the typical investor will make money investing in commodities futures contracts?
A. 50%
B. 30%
C. 20%
D. 10%
The answer is D. Ninety percent of individual investors in futures contracts lose money. Funds used for these investments should be only those that one can afford to lose!
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
Demonstrate how you can make money investing in real estate.
Recognize how to take advantage of beneficial tax treatments in real estate investing.
Calculate the right price to pay for real estate and how to finance your purchase.
Assess the disadvantages of investing in real estate.
Summarize the risks and challenges of investing in the alternative investments of collectibles, precious metals, and gems.
Explain why options and futures are risky investments.
WHAT DO YOU RECOMMEND?
Britanny Day, a 37-year-old marketing manager for a large corporation in Long Beach, California, earns $110,000 per year. She saves an additional about $800 each month beyond her contributions to her employer's 401(k) retirement plan. Her total 401(k) holdings are worth $260,000.
Ever since her grandfather gave her some stocks as a child, Britanny has loved investing—and she has enjoyed a good track record with her efforts. Britanny is an active trader, often trading every three or four weeks, primarily in the oil, technology, and pharmaceutical prescription drug industries. Every year, she has some losses as well as gains. Her private portfolio is currently worth $160,000. Britanny has never bought or sold options or futures contracts, but her stockbroker suggested that she consider them. Britanny also has a friend who owns several residential rental properties that she bought when prices were low who has asked her to consider investing as her partner in her next real estate venture.
What do you recommend to Britanny on the subject of real estate and alternative investments regarding:
1. Investing in real estate?
2. Putting some of her money in an alternative investment, like a collectible or gold?
3. Investing in options and futures contracts?
YOUR NEXT FIVE YEARS
In the next five years, you can start achieving financial success by doing the following related to real estate and high-risk investments:
1.Before deciding to invest in real estate, carefully consider the disadvantages of such investments.
2.Invest only in real estate properties that have a positive cash flow.
3.Finance real estate investments with conventional mortgages, not mortgages with adjustable interest terms.
4.Use the price-to-rent ratio and di ...
16 Real Estate and High-Risk InvestmentsYOU MUST BE KIDDING, Rkendahudson
16 Real Estate and High-Risk Investments
YOU MUST BE KIDDING, RIGHT?
Friends Nicholas Belisle and Joseph Sanders both have aggressive investment philosophies. Nicholas invests primarily in residential real estate, and Joseph invests in commodities futures contracts. As longtime investors, they consider themselves experts, but occasionally, each has experienced financial losses. What are the odds that the typical investor will make money investing in commodities futures contracts?
A. 50%
B. 30%
C. 20%
D. 10%
The answer is D. Ninety percent of individual investors in futures contracts lose money. Funds used for these investments should be only those that one can afford to lose!
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
Demonstrate how you can make money investing in real estate.
Recognize how to take advantage of beneficial tax treatments in real estate investing.
Calculate the right price to pay for real estate and how to finance your purchase.
Assess the disadvantages of investing in real estate.
Summarize the risks and challenges of investing in the alternative investments of collectibles, precious metals, and gems.
Explain why options and futures are risky investments.
WHAT DO YOU RECOMMEND?
Britanny Day, a 37-year-old marketing manager for a large corporation in Long Beach, California, earns $110,000 per year. She saves an additional about $800 each month beyond her contributions to her employer's 401(k) retirement plan. Her total 401(k) holdings are worth $260,000.
Ever since her grandfather gave her some stocks as a child, Britanny has loved investing—and she has enjoyed a good track record with her efforts. Britanny is an active trader, often trading every three or four weeks, primarily in the oil, technology, and pharmaceutical prescription drug industries. Every year, she has some losses as well as gains. Her private portfolio is currently worth $160,000. Britanny has never bought or sold options or futures contracts, but her stockbroker suggested that she consider them. Britanny also has a friend who owns several residential rental properties that she bought when prices were low who has asked her to consider investing as her partner in her next real estate venture.
What do you recommend to Britanny on the subject of real estate and alternative investments regarding:
1. Investing in real estate?
2. Putting some of her money in an alternative investment, like a collectible or gold?
3. Investing in options and futures contracts?
YOUR NEXT FIVE YEARS
In the next five years, you can start achieving financial success by doing the following related to real estate and high-risk investments:
1.Before deciding to invest in real estate, carefully consider the disadvantages of such investments.
2.Invest only in real estate properties that have a positive cash flow.
3.Finance real estate investments with conventional mortgages, not mortgages with adjustable interest terms.
4.Use the price-to-rent ratio and di ...
16 Real Estate and High-Risk InvestmentsYOU MUST BE KIDDING, R.docxherminaprocter
16 Real Estate and High-Risk Investments
YOU MUST BE KIDDING, RIGHT?
Friends Nicholas Belisle and Joseph Sanders both have aggressive investment philosophies. Nicholas invests primarily in residential real estate, and Joseph invests in commodities futures contracts. As longtime investors, they consider themselves experts, but occasionally, each has experienced financial losses. What are the odds that the typical investor will make money investing in commodities futures contracts?
A. 50%
B. 30%
C. 20%
D. 10%
The answer is D. Ninety percent of individual investors in futures contracts lose money. Funds used for these investments should be only those that one can afford to lose!
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
Demonstrate how you can make money investing in real estate.
Recognize how to take advantage of beneficial tax treatments in real estate investing.
Calculate the right price to pay for real estate and how to finance your purchase.
Assess the disadvantages of investing in real estate.
Summarize the risks and challenges of investing in the alternative investments of collectibles, precious metals, and gems.
Explain why options and futures are risky investments.
WHAT DO YOU RECOMMEND?
Britanny Day, a 37-year-old marketing manager for a large corporation in Long Beach, California, earns $110,000 per year. She saves an additional about $800 each month beyond her contributions to her employer's 401(k) retirement plan. Her total 401(k) holdings are worth $260,000.
Ever since her grandfather gave her some stocks as a child, Britanny has loved investing—and she has enjoyed a good track record with her efforts. Britanny is an active trader, often trading every three or four weeks, primarily in the oil, technology, and pharmaceutical prescription drug industries. Every year, she has some losses as well as gains. Her private portfolio is currently worth $160,000. Britanny has never bought or sold options or futures contracts, but her stockbroker suggested that she consider them. Britanny also has a friend who owns several residential rental properties that she bought when prices were low who has asked her to consider investing as her partner in her next real estate venture.
What do you recommend to Britanny on the subject of real estate and alternative investments regarding:
1. Investing in real estate?
2. Putting some of her money in an alternative investment, like a collectible or gold?
3. Investing in options and futures contracts?
YOUR NEXT FIVE YEARS
In the next five years, you can start achieving financial success by doing the following related to real estate and high-risk investments:
1.Before deciding to invest in real estate, carefully consider the disadvantages of such investments.
2.Invest only in real estate properties that have a positive cash flow.
3.Finance real estate investments with conventional mortgages, not mortgages with adjustable interest terms.
4.Use the price-to-rent ratio and di.
The document analyzes 10 potential investment properties in and around Liverpool for profitability. It summarizes that after analysis, only 5 properties will provide a profit, with 4 being good investments. These include 1 residential property providing £35,846 profit and 3 office properties providing a combined £235,000 profit over 20 years. The analysis factors in risks and finds that the profits remain sufficient even after sensitivity testing changes to variables.
Before starting on this assignment, make sure to carefully review .docxAASTHA76
Before starting on this assignment, make sure to carefully review the background readings. Part A requires you to make some computations, and Part B requires you to analyze some scenarios using your knowledge of the concepts. So make sure to go through the computational examples in the required readings and also thoroughly review the key concepts before starting on this assignment.
Case Assignment
Part A: Quantitative Problems
1. Suppose QuickCharge Corporation manufactures phone chargers. They sell their chargers for $20. Their fixed operating costs are $100,000 and their variable operating costs are $10 per charger. Currently they are selling 30,000 chargers per year.
A. What is QuickCharge’s EBIT (earnings before interest and taxes) at current sales of 30,000?
B. What is QuickCharge’s breakeven point?
C. Calculate the EBIT if QuickCharge’s sales increase 50% to 45,000 chargers. What is the percent of change in EBIT under this increase in sales? Also, calculate the EBIT if the company's sales decrease 50% to 15,000 chargers. What is the percent of change in EBIT under this decrease in sales?
D. What is QuickCharge’s degree of operating leverage? Based on your computation, what does its operating leverage say about QuickCharge’s business risk?
2. The StayDry Umbrella Corporation will have an EBIT of $100,000 if there is a normal amount of rain this year. But if there is a drought, they will have an EBIT of only $50,000. The interest rate on debt is 10%, and the tax rate is 35%. The company does not pay any preferred dividends.
A. If StayDry has zero debt and 50,000 outstanding shares, what will its EPS (earnings per share) be if there is normal rain? What will its EPS be if there is a drought? What is its DFL (degree of financial leverage)?
B. Now suppose StayDry has decided to take on $300,000 in debt and has used these funds to buy back half of the outstanding shares so now there are only 25,000 outstanding shares. What is the new EPS and DFL for both normal rain and drought?
C. Based on your answers to a) and b) above, what are the trade-offs management has to make between zero debt or $300,000 in debt? What are the benefits and disadvantages of taking on this debt?
Part B: Conceptual Questions
1. For each of the following scenarios, explain whether the situation describes financial risk or business risk. Explain your answers to each scenario using at least one of the references from the background readings:
A. A pharmaceutical company has developed a new cancer treatment drug that has a much higher success rate than other drugs currently in the market. It has the potential to triple the company’s profits. However, the FDA has expressed concern about some side effects, and it is not clear if the FDA will approve the drug.
B. An airline has an EBIT of $100 million per year. However, it also has a huge amount of debt and pays $97 million per year in interest. Its EBIT is relatively stable but tends to go up or down by $5 million or so each ...
This document provides a summary of topics covered in Voltaire Financial's inaugural half-yearly bulletin, including:
- An overview of the changing residential development finance market, noting a shift away from large banks toward newer lenders like debt funds and peer-to-peer lenders.
- A guest article on rights of light and legal issues that can arise from infringing on these rights during redevelopment projects.
- Brief updates on taxation of annual tax on enveloped dwellings and trends in bridging loans.
- Case studies of recent projects completed by Voltaire Financial.
The document discusses trends in residential development lending, including less interest in super-prime projects, openness
Guaranteed Return Mr. Juan Tobias Rich (Toby to his friends) has r.pdfvickyaichslg
Guaranteed Return
Mr. Juan Tobias Rich (Toby to his friends) has recently inherited $50,000 from the estate of his
great-aunt. He has never had capital to invest before, so he is not quite sure what to do. His
friend Mr. Richard Stuffy is an investment counselor for a local stock brokerage firm, Bullfinch
and Bearwallow. In their initial talk, Toby said, “I want to invest the entire inheritance, but no
more now. I am living very well on my salary, and I really have no need for the money in the
near-term. My goal is to combine this with a good chunk of my future raises, so that I can retire
early— in 25 years or so.” Richard believes Toby will follow his savings plan. Toby in two years
saved enough for the down payment on a house, which he purchased last year.
Toby’s capital is too limited for many forms of independent investment. On the other hand, his
possibilities go far beyond a certificate of deposit or a few shares of stock. As is normal practice
with new clients, Richard has developed three distinctly different investment alternatives (in this
case, each is for $50,000). Richard uses his client’s reactions to the investment choices to
develop clearer goals for each client’s investment strategy.
The first of these alternatives is the financing of a second mortgage on a commercial structure.
The risk on this investment is relatively low because the loan is secured by the building. It runs
for a 25-year period, with annual payments at a 15% annual rate. The borrower pays the cost of
title and fire insurance as well as the fees to the bank that acts as the intermediary for payments.
The second alternative is the purchase of 25-year bonds issued by the local power authority.
These bonds carry a face rate of 9% with interest paid annually. However, interest rates for this
class of bond have risen in recent years (currently 11%) so that the bonds are selling at a discount
from their face value. The power authority has recently announced some cost overruns on the
nuclear facility that is under construction. In reaction to this news and fearful of more substantial
problems, their bonds in particular are being discounted more heavily—to correspond to a 14%
rate of return. Thus, if the bonds are paid off, this is a rare opportunity, but there is some risk of
default.
The third alternative is as a limited partner in a business run by some friends of Toby and
Richard. The business is a spin-off from a local high-tech firm, which is still in the embryonic
stage. Their friends hope to take the firm public (sell stock and become publicly held) within
three years. At this point, the investor’s capital would be returned with substantial interest.
However, the company may go bankrupt instead. If this happens, Toby can expect to get back
about 20 cents on the dollar. Although many intermediate states are possible, Richard believes
that the two extreme possibilities provide adequate guidance. He estimates that there is a 40%
chance of success and that the o.
16 Real Estate and High-Risk InvestmentsYOU MUST BE KIDDING, R.docxaulasnilda
16 Real Estate and High-Risk Investments
YOU MUST BE KIDDING, RIGHT?
Friends Nicholas Belisle and Joseph Sanders both have aggressive investment philosophies. Nicholas invests primarily in residential real estate, and Joseph invests in commodities futures contracts. As longtime investors, they consider themselves experts, but occasionally, each has experienced financial losses. What are the odds that the typical investor will make money investing in commodities futures contracts?
A. 50%
B. 30%
C. 20%
D. 10%
The answer is D. Ninety percent of individual investors in futures contracts lose money. Funds used for these investments should be only those that one can afford to lose!
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
Demonstrate how you can make money investing in real estate.
Recognize how to take advantage of beneficial tax treatments in real estate investing.
Calculate the right price to pay for real estate and how to finance your purchase.
Assess the disadvantages of investing in real estate.
Summarize the risks and challenges of investing in the alternative investments of collectibles, precious metals, and gems.
Explain why options and futures are risky investments.
WHAT DO YOU RECOMMEND?
Britanny Day, a 37-year-old marketing manager for a large corporation in Long Beach, California, earns $110,000 per year. She saves an additional about $800 each month beyond her contributions to her employer's 401(k) retirement plan. Her total 401(k) holdings are worth $260,000.
Ever since her grandfather gave her some stocks as a child, Britanny has loved investing—and she has enjoyed a good track record with her efforts. Britanny is an active trader, often trading every three or four weeks, primarily in the oil, technology, and pharmaceutical prescription drug industries. Every year, she has some losses as well as gains. Her private portfolio is currently worth $160,000. Britanny has never bought or sold options or futures contracts, but her stockbroker suggested that she consider them. Britanny also has a friend who owns several residential rental properties that she bought when prices were low who has asked her to consider investing as her partner in her next real estate venture.
What do you recommend to Britanny on the subject of real estate and alternative investments regarding:
1. Investing in real estate?
2. Putting some of her money in an alternative investment, like a collectible or gold?
3. Investing in options and futures contracts?
YOUR NEXT FIVE YEARS
In the next five years, you can start achieving financial success by doing the following related to real estate and high-risk investments:
1.Before deciding to invest in real estate, carefully consider the disadvantages of such investments.
2.Invest only in real estate properties that have a positive cash flow.
3.Finance real estate investments with conventional mortgages, not mortgages with adjustable interest terms.
4.Use the price-to-rent ratio and di ...
16 Real Estate and High-Risk InvestmentsYOU MUST BE KIDDING, Rkendahudson
16 Real Estate and High-Risk Investments
YOU MUST BE KIDDING, RIGHT?
Friends Nicholas Belisle and Joseph Sanders both have aggressive investment philosophies. Nicholas invests primarily in residential real estate, and Joseph invests in commodities futures contracts. As longtime investors, they consider themselves experts, but occasionally, each has experienced financial losses. What are the odds that the typical investor will make money investing in commodities futures contracts?
A. 50%
B. 30%
C. 20%
D. 10%
The answer is D. Ninety percent of individual investors in futures contracts lose money. Funds used for these investments should be only those that one can afford to lose!
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
Demonstrate how you can make money investing in real estate.
Recognize how to take advantage of beneficial tax treatments in real estate investing.
Calculate the right price to pay for real estate and how to finance your purchase.
Assess the disadvantages of investing in real estate.
Summarize the risks and challenges of investing in the alternative investments of collectibles, precious metals, and gems.
Explain why options and futures are risky investments.
WHAT DO YOU RECOMMEND?
Britanny Day, a 37-year-old marketing manager for a large corporation in Long Beach, California, earns $110,000 per year. She saves an additional about $800 each month beyond her contributions to her employer's 401(k) retirement plan. Her total 401(k) holdings are worth $260,000.
Ever since her grandfather gave her some stocks as a child, Britanny has loved investing—and she has enjoyed a good track record with her efforts. Britanny is an active trader, often trading every three or four weeks, primarily in the oil, technology, and pharmaceutical prescription drug industries. Every year, she has some losses as well as gains. Her private portfolio is currently worth $160,000. Britanny has never bought or sold options or futures contracts, but her stockbroker suggested that she consider them. Britanny also has a friend who owns several residential rental properties that she bought when prices were low who has asked her to consider investing as her partner in her next real estate venture.
What do you recommend to Britanny on the subject of real estate and alternative investments regarding:
1. Investing in real estate?
2. Putting some of her money in an alternative investment, like a collectible or gold?
3. Investing in options and futures contracts?
YOUR NEXT FIVE YEARS
In the next five years, you can start achieving financial success by doing the following related to real estate and high-risk investments:
1.Before deciding to invest in real estate, carefully consider the disadvantages of such investments.
2.Invest only in real estate properties that have a positive cash flow.
3.Finance real estate investments with conventional mortgages, not mortgages with adjustable interest terms.
4.Use the price-to-rent ratio and di ...
16 Real Estate and High-Risk InvestmentsYOU MUST BE KIDDING, R.docxherminaprocter
16 Real Estate and High-Risk Investments
YOU MUST BE KIDDING, RIGHT?
Friends Nicholas Belisle and Joseph Sanders both have aggressive investment philosophies. Nicholas invests primarily in residential real estate, and Joseph invests in commodities futures contracts. As longtime investors, they consider themselves experts, but occasionally, each has experienced financial losses. What are the odds that the typical investor will make money investing in commodities futures contracts?
A. 50%
B. 30%
C. 20%
D. 10%
The answer is D. Ninety percent of individual investors in futures contracts lose money. Funds used for these investments should be only those that one can afford to lose!
LEARNING OBJECTIVES
After reading this chapter, you should be able to:
Demonstrate how you can make money investing in real estate.
Recognize how to take advantage of beneficial tax treatments in real estate investing.
Calculate the right price to pay for real estate and how to finance your purchase.
Assess the disadvantages of investing in real estate.
Summarize the risks and challenges of investing in the alternative investments of collectibles, precious metals, and gems.
Explain why options and futures are risky investments.
WHAT DO YOU RECOMMEND?
Britanny Day, a 37-year-old marketing manager for a large corporation in Long Beach, California, earns $110,000 per year. She saves an additional about $800 each month beyond her contributions to her employer's 401(k) retirement plan. Her total 401(k) holdings are worth $260,000.
Ever since her grandfather gave her some stocks as a child, Britanny has loved investing—and she has enjoyed a good track record with her efforts. Britanny is an active trader, often trading every three or four weeks, primarily in the oil, technology, and pharmaceutical prescription drug industries. Every year, she has some losses as well as gains. Her private portfolio is currently worth $160,000. Britanny has never bought or sold options or futures contracts, but her stockbroker suggested that she consider them. Britanny also has a friend who owns several residential rental properties that she bought when prices were low who has asked her to consider investing as her partner in her next real estate venture.
What do you recommend to Britanny on the subject of real estate and alternative investments regarding:
1. Investing in real estate?
2. Putting some of her money in an alternative investment, like a collectible or gold?
3. Investing in options and futures contracts?
YOUR NEXT FIVE YEARS
In the next five years, you can start achieving financial success by doing the following related to real estate and high-risk investments:
1.Before deciding to invest in real estate, carefully consider the disadvantages of such investments.
2.Invest only in real estate properties that have a positive cash flow.
3.Finance real estate investments with conventional mortgages, not mortgages with adjustable interest terms.
4.Use the price-to-rent ratio and di.
The document analyzes 10 potential investment properties in and around Liverpool for profitability. It summarizes that after analysis, only 5 properties will provide a profit, with 4 being good investments. These include 1 residential property providing £35,846 profit and 3 office properties providing a combined £235,000 profit over 20 years. The analysis factors in risks and finds that the profits remain sufficient even after sensitivity testing changes to variables.
Before starting on this assignment, make sure to carefully review .docxAASTHA76
Before starting on this assignment, make sure to carefully review the background readings. Part A requires you to make some computations, and Part B requires you to analyze some scenarios using your knowledge of the concepts. So make sure to go through the computational examples in the required readings and also thoroughly review the key concepts before starting on this assignment.
Case Assignment
Part A: Quantitative Problems
1. Suppose QuickCharge Corporation manufactures phone chargers. They sell their chargers for $20. Their fixed operating costs are $100,000 and their variable operating costs are $10 per charger. Currently they are selling 30,000 chargers per year.
A. What is QuickCharge’s EBIT (earnings before interest and taxes) at current sales of 30,000?
B. What is QuickCharge’s breakeven point?
C. Calculate the EBIT if QuickCharge’s sales increase 50% to 45,000 chargers. What is the percent of change in EBIT under this increase in sales? Also, calculate the EBIT if the company's sales decrease 50% to 15,000 chargers. What is the percent of change in EBIT under this decrease in sales?
D. What is QuickCharge’s degree of operating leverage? Based on your computation, what does its operating leverage say about QuickCharge’s business risk?
2. The StayDry Umbrella Corporation will have an EBIT of $100,000 if there is a normal amount of rain this year. But if there is a drought, they will have an EBIT of only $50,000. The interest rate on debt is 10%, and the tax rate is 35%. The company does not pay any preferred dividends.
A. If StayDry has zero debt and 50,000 outstanding shares, what will its EPS (earnings per share) be if there is normal rain? What will its EPS be if there is a drought? What is its DFL (degree of financial leverage)?
B. Now suppose StayDry has decided to take on $300,000 in debt and has used these funds to buy back half of the outstanding shares so now there are only 25,000 outstanding shares. What is the new EPS and DFL for both normal rain and drought?
C. Based on your answers to a) and b) above, what are the trade-offs management has to make between zero debt or $300,000 in debt? What are the benefits and disadvantages of taking on this debt?
Part B: Conceptual Questions
1. For each of the following scenarios, explain whether the situation describes financial risk or business risk. Explain your answers to each scenario using at least one of the references from the background readings:
A. A pharmaceutical company has developed a new cancer treatment drug that has a much higher success rate than other drugs currently in the market. It has the potential to triple the company’s profits. However, the FDA has expressed concern about some side effects, and it is not clear if the FDA will approve the drug.
B. An airline has an EBIT of $100 million per year. However, it also has a huge amount of debt and pays $97 million per year in interest. Its EBIT is relatively stable but tends to go up or down by $5 million or so each ...
This document provides a summary of topics covered in Voltaire Financial's inaugural half-yearly bulletin, including:
- An overview of the changing residential development finance market, noting a shift away from large banks toward newer lenders like debt funds and peer-to-peer lenders.
- A guest article on rights of light and legal issues that can arise from infringing on these rights during redevelopment projects.
- Brief updates on taxation of annual tax on enveloped dwellings and trends in bridging loans.
- Case studies of recent projects completed by Voltaire Financial.
The document discusses trends in residential development lending, including less interest in super-prime projects, openness
Intercepting and Preventing Foreclosure.robert tapia
The document discusses options for homeowners facing foreclosure such as loan modifications, refinancing, or selling the home. It cautions homeowners to carefully review their loan documents to ensure they met the lender's qualifications and warns of potential foreclosure rescue scams. Homeowners are encouraged to audit their loan documents for potential fraud and stand up for their rights to prevent wrongful foreclosure.
This document provides an overview of real estate investing in Canada. It discusses the historical returns of real estate compared to other investment options, and the reasons to invest in real estate, including leveraged appreciation, equity repayment by tenants, tax advantages, and cash flow potential. It outlines some common hurdles like financing and property management, and how to overcome them. Examples are provided on calculating key real estate metrics like net operating income and capitalization rate. Options for real estate investment are explored, including buying rental properties, investing with a joint venture partner, or public/private REITs. Additional resources for learning about Canadian real estate investment are listed.
This document discusses the tax planning strategy of income splitting through non-arm's length interest-free loans between family members. It notes that until March 31, 2012, attribution rules do not apply to loans made at the prescribed interest rate of 1%. Making a loan at the 1% rate allows high-income family members to transfer investment income to be taxed in the hands of lower-income family members, resulting in overall tax savings for the family. Several examples are provided to illustrate how the strategy can significantly reduce taxes over time through compounding returns on the income transferred.
Choice Group Homes is a start-up company that will purchase and acquire first and second lien performing and non-performing single-family residential mortgage notes. It will operate as a management company for Choice Investments LLC, which will purchase the notes. Choice Group Homes will distinguish itself through close monitoring of industry trends and excellent customer service. The owners, Lloyd and Saundra Bowman, have business and real estate experience. Choice Investments LLC will pursue various strategies for generating profits from acquired notes, including loan modifications, collection of past due payments, discounted payoffs, foreclosure, and sale of re-performing notes. There is significant opportunity in acquiring discounted non-performing second lien notes and working with homeowners
The managers of the California Distressed Land Asset Fund believe that while the US housing market appears to be stabilizing, conditions will continue to be difficult in 2010. They plan to take advantage of opportunities by acquiring apartment complexes and portfolios of distressed mortgages at steep discounts. Their experience during previous real estate cycles positions them to profit by buying cheap assets that generate income or have a clear exit strategy. Now is not too late to invest in US real estate but investors must choose managers carefully to navigate the challenging market conditions.
This document discusses the benefits of converting traditional IRAs to Roth IRAs in 2010 before income limits are removed. It provides an example of a client converting a $200,000 traditional IRA invested in rental property to a Roth IRA. While the client must pay taxes on the conversion amount over 2012-2013, all future rental income, property appreciation, and proceeds from sale will be tax free in retirement. The document encourages consulting with tax advisors and considering if assets will appreciate and tax rates may rise in deciding whether to convert traditional IRA funds to Roth IRAs.
Crowdfunding Basics and the Impact on Angel InvestorsLynn M. Miller
Crowdfunding allows companies to raise funds from many small individual investors online rather than from traditional sources like venture capitalists or business angels. There are four main types of crowdfunding: microfinance, peer-to-peer lending, donor-based funding, and investment crowdfunding. New JOBS Act regulations will allow investment crowdfunding in the US through regulated online portals. This may compete with or complement traditional angel investors by providing an alternative source of funding for startups. However, angels may still provide advantages like business expertise and mentorship that "dumb money" crowdfunding alone cannot. The crowdfunding landscape is still developing and will change the investment environment significantly.
1) International finance is one of the four main areas of finance.
2) A major disadvantage of the corporate form of business is double taxation.
3) Everything else equal, an industry with more leverage will have a higher return on equity.
Silverwood Capital Fund I LLC formed to take advantage of a narrow niche in the mortgage note industry. The Company will seek to acquire, workout, and manage nonperforming real estate notes secured by residential 1-4 unit properties. While the primary emphasis will be focusing on nonperforming junior and Home Equity Line Of Credit (“HELOC”) notes, we will purchase select senior liens and REOs.
Using our network of banking and equity fund contacts, and advanced marketing techniques, the Fund will purchase mortgages and real estate at significant discounts to its underlying value. By focusing on distressed mortgages and properties, we know the potential for above average returns exist.
These securities are being offered under an exemption provided by SEC Regulation D Rule 506(c). Only accredited investors who meet the SEC Regulation D 501 “accredited investor” accreditation standards and who provide suitable verification of accredited status may invest into this Offering.
• Any historical performance data represents past performance. Past performance does not guarantee future results;
• Current performance may be different than the performance data presented;
• The Company is not required by law to follow any standard methodology when calculating and representing performance data;
• The performance of the Company may not be directly comparable to the performance of other private or registered funds or companies;
• The securities are being offered in reliance on an exemption from the registration requirements, and therefore are not required to comply with certain specific disclosure requirements;
• The Securities and Exchange Commission has not passed upon the merits of or approved the securities, the terms of the offering, or the accuracy of the materials.
The document summarizes a presentation about establishing a public bank in Philadelphia using existing government funds. It discusses how Comprehensive Annual Financial Reports show all government assets and accumulated wealth, not just annual budgets. Currently, Philadelphia raises money through taxes, investments, and issuing bonds at interest rates of 2-5%. The presentation argues the city could create credit itself and receive dividends from a public bank. It provides an example of North Dakota's public bank. The document reviews Philadelphia's pension fund investments and risks, including foreign currency exposure and securities lending. It questions the safety and prudence of hedge fund investments, which often underperform with high fees.
EDITED chapter 6 interest rates and bond valuation.pptMei Miraflor
This document provides an overview of key concepts related to interest rates, bond valuation, and corporate bonds. It includes definitions of important terms like nominal interest rate, yield curve, bond features, and bond valuation. Learning goals are outlined for understanding interest rate fundamentals, bond legal aspects, bond pricing, and valuation models. Examples are provided to illustrate concepts like expectations theory of the yield curve and calculating bond yields.
BUYING YOUR FIRST HOME - capitalhomelending.cacapitalhl
1) The document provides guidance on shopping for a mortgage by outlining three key steps: understanding your mortgage needs and options, getting pre-approved, and making the right decision.
2) The first step involves determining how much you can afford for a down payment, mortgage payments, fees and deciding on a mortgage term, amortization period, and whether to choose a fixed or variable interest rate.
3) The second step is to get pre-approved in order to understand what you qualify for before house hunting, and the third step is to consider all costs when deciding on the right mortgage.
Investor's Capital Funding (ICF) provides alternative real estate financing in Texas, focusing on short-term loans secured by commercial and residential property. The company was founded by Managing Partners Rob Champion and Tom Wagner, who have over 30 years of combined real estate lending experience. ICF offers investors opportunities to earn returns of 10-12% by participating in non-traditional real estate loans that are secured by hard assets and have protective equity.
The document discusses different investment options and their risk and return profiles, including stocks, bonds, and life settlements. It then provides details on how life settlement investments work, including purchasing a portion of a life insurance policy at a discount, with returns paid out when the insured passes away. Life settlements offer potential annual returns of 10-15% with very low risk of losing principal, providing diversification benefits compared to traditional markets like stocks and bonds.
jimmy stepanian | Real estate commercial financing ideas | Jim stepanian |Jimmy Stepanian
The document discusses various aspects of commercial mortgages, including:
1) Commercial mortgages always involve conveying a note and mortgage between the borrower and lender, with the note detailing financial obligations and the mortgage pledging the property as security.
2) Commercial mortgages are often partially amortized "balloon" loans with short maturities of 5-10 years to reduce the lender's interest rate risk.
3) Balloon loans are less sensitive to interest rate shocks than fully amortized 30-year loans.
1 Apartment Investment 20221 by Charles Wurtzebach.docxwrite30
The document presents three potential apartment investment opportunities in Chicago for cousins Ron and Rene DuPage. Ron recently sold his business and wants to diversify his investments. Rene owns a paper company and also wants to diversify. Their advisor Josh Wainright has identified three properties that could meet their return and demographic requirements. The document provides background on Ron and Rene's financial situations and investment objectives to set up an analysis of the three potential apartment investment opportunities.
This document contains sample problems related to finance topics like bond valuation, interest rates, annuities, loans, and retirement planning. It includes multiple choice and calculation questions across various sections. Students are asked to calculate values, interest rates, payments and balances given rates of return, time periods, cash flows and other financial variables. Explanations are provided for some answers.
The document discusses net worth and how it is calculated. It defines net worth as assets minus liabilities. Assets are divided into liquid, semi-liquid, and non-liquid categories. Liabilities are divided into short-term and long-term debts. The document also discusses debt-to-equity ratios and strategies for increasing net worth such as higher investment returns, reducing debt, and saving more regularly. Two examples of calculating net worth statements and debt-to-equity ratios for individuals are provided.
The document discusses various types of bonds as investments, including their purposes, characteristics, and suitability for different investors. It covers corporate bonds, government bonds, municipal bonds, and factors to consider when deciding whether to buy or sell a bond such as its ratings, yield, and market value compared to current interest rates.
Lending & Borrowering Out of Your IRAryankimura
The document discusses the benefits of self-directed IRAs and the ability to use them to engage in alternative investments like real estate lending and borrowing. It provides an overview of common IRA types that can be self-directed as well as permissible investment options. The document also presents perspectives and considerations from the points of view of both borrowers and lenders engaging in private financing through self-directed IRAs.
Groups are defined by all of the following characteristics except.pdfvickyaichslg
Groups are defined by all of the following characteristics except:
a. The members are mutually dependent on each other.
b. There is recognition that people belong to a collective entity.
c. There are rules and roles that control people
Solution
Soln:
The answer is e because group membership requires conformance to group norms and group
needs are more important than people\'s personal needs.Therefore e is not characteristic of a
group..
Graph the function. Find the domain and rangey= 32 (square root o.pdfvickyaichslg
Graph the function. Find the domain and range
y= 3/2 (square root of x+ 3) - 1
1. The domain is ____? Or the domain is all real numbers? Type as an inequalit
2. What is the range? Or is the range all real numbers? Tyke as an inequality
Solution
1) domain is allowed x values
so since we have square root x+3>=0
so domain is -3<=x.
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Intercepting and Preventing Foreclosure.robert tapia
The document discusses options for homeowners facing foreclosure such as loan modifications, refinancing, or selling the home. It cautions homeowners to carefully review their loan documents to ensure they met the lender's qualifications and warns of potential foreclosure rescue scams. Homeowners are encouraged to audit their loan documents for potential fraud and stand up for their rights to prevent wrongful foreclosure.
This document provides an overview of real estate investing in Canada. It discusses the historical returns of real estate compared to other investment options, and the reasons to invest in real estate, including leveraged appreciation, equity repayment by tenants, tax advantages, and cash flow potential. It outlines some common hurdles like financing and property management, and how to overcome them. Examples are provided on calculating key real estate metrics like net operating income and capitalization rate. Options for real estate investment are explored, including buying rental properties, investing with a joint venture partner, or public/private REITs. Additional resources for learning about Canadian real estate investment are listed.
This document discusses the tax planning strategy of income splitting through non-arm's length interest-free loans between family members. It notes that until March 31, 2012, attribution rules do not apply to loans made at the prescribed interest rate of 1%. Making a loan at the 1% rate allows high-income family members to transfer investment income to be taxed in the hands of lower-income family members, resulting in overall tax savings for the family. Several examples are provided to illustrate how the strategy can significantly reduce taxes over time through compounding returns on the income transferred.
Choice Group Homes is a start-up company that will purchase and acquire first and second lien performing and non-performing single-family residential mortgage notes. It will operate as a management company for Choice Investments LLC, which will purchase the notes. Choice Group Homes will distinguish itself through close monitoring of industry trends and excellent customer service. The owners, Lloyd and Saundra Bowman, have business and real estate experience. Choice Investments LLC will pursue various strategies for generating profits from acquired notes, including loan modifications, collection of past due payments, discounted payoffs, foreclosure, and sale of re-performing notes. There is significant opportunity in acquiring discounted non-performing second lien notes and working with homeowners
The managers of the California Distressed Land Asset Fund believe that while the US housing market appears to be stabilizing, conditions will continue to be difficult in 2010. They plan to take advantage of opportunities by acquiring apartment complexes and portfolios of distressed mortgages at steep discounts. Their experience during previous real estate cycles positions them to profit by buying cheap assets that generate income or have a clear exit strategy. Now is not too late to invest in US real estate but investors must choose managers carefully to navigate the challenging market conditions.
This document discusses the benefits of converting traditional IRAs to Roth IRAs in 2010 before income limits are removed. It provides an example of a client converting a $200,000 traditional IRA invested in rental property to a Roth IRA. While the client must pay taxes on the conversion amount over 2012-2013, all future rental income, property appreciation, and proceeds from sale will be tax free in retirement. The document encourages consulting with tax advisors and considering if assets will appreciate and tax rates may rise in deciding whether to convert traditional IRA funds to Roth IRAs.
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Crowdfunding allows companies to raise funds from many small individual investors online rather than from traditional sources like venture capitalists or business angels. There are four main types of crowdfunding: microfinance, peer-to-peer lending, donor-based funding, and investment crowdfunding. New JOBS Act regulations will allow investment crowdfunding in the US through regulated online portals. This may compete with or complement traditional angel investors by providing an alternative source of funding for startups. However, angels may still provide advantages like business expertise and mentorship that "dumb money" crowdfunding alone cannot. The crowdfunding landscape is still developing and will change the investment environment significantly.
1) International finance is one of the four main areas of finance.
2) A major disadvantage of the corporate form of business is double taxation.
3) Everything else equal, an industry with more leverage will have a higher return on equity.
Silverwood Capital Fund I LLC formed to take advantage of a narrow niche in the mortgage note industry. The Company will seek to acquire, workout, and manage nonperforming real estate notes secured by residential 1-4 unit properties. While the primary emphasis will be focusing on nonperforming junior and Home Equity Line Of Credit (“HELOC”) notes, we will purchase select senior liens and REOs.
Using our network of banking and equity fund contacts, and advanced marketing techniques, the Fund will purchase mortgages and real estate at significant discounts to its underlying value. By focusing on distressed mortgages and properties, we know the potential for above average returns exist.
These securities are being offered under an exemption provided by SEC Regulation D Rule 506(c). Only accredited investors who meet the SEC Regulation D 501 “accredited investor” accreditation standards and who provide suitable verification of accredited status may invest into this Offering.
• Any historical performance data represents past performance. Past performance does not guarantee future results;
• Current performance may be different than the performance data presented;
• The Company is not required by law to follow any standard methodology when calculating and representing performance data;
• The performance of the Company may not be directly comparable to the performance of other private or registered funds or companies;
• The securities are being offered in reliance on an exemption from the registration requirements, and therefore are not required to comply with certain specific disclosure requirements;
• The Securities and Exchange Commission has not passed upon the merits of or approved the securities, the terms of the offering, or the accuracy of the materials.
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This document provides an overview of key concepts related to interest rates, bond valuation, and corporate bonds. It includes definitions of important terms like nominal interest rate, yield curve, bond features, and bond valuation. Learning goals are outlined for understanding interest rate fundamentals, bond legal aspects, bond pricing, and valuation models. Examples are provided to illustrate concepts like expectations theory of the yield curve and calculating bond yields.
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2) The first step involves determining how much you can afford for a down payment, mortgage payments, fees and deciding on a mortgage term, amortization period, and whether to choose a fixed or variable interest rate.
3) The second step is to get pre-approved in order to understand what you qualify for before house hunting, and the third step is to consider all costs when deciding on the right mortgage.
Investor's Capital Funding (ICF) provides alternative real estate financing in Texas, focusing on short-term loans secured by commercial and residential property. The company was founded by Managing Partners Rob Champion and Tom Wagner, who have over 30 years of combined real estate lending experience. ICF offers investors opportunities to earn returns of 10-12% by participating in non-traditional real estate loans that are secured by hard assets and have protective equity.
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jimmy stepanian | Real estate commercial financing ideas | Jim stepanian |Jimmy Stepanian
The document discusses various aspects of commercial mortgages, including:
1) Commercial mortgages always involve conveying a note and mortgage between the borrower and lender, with the note detailing financial obligations and the mortgage pledging the property as security.
2) Commercial mortgages are often partially amortized "balloon" loans with short maturities of 5-10 years to reduce the lender's interest rate risk.
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This document contains sample problems related to finance topics like bond valuation, interest rates, annuities, loans, and retirement planning. It includes multiple choice and calculation questions across various sections. Students are asked to calculate values, interest rates, payments and balances given rates of return, time periods, cash flows and other financial variables. Explanations are provided for some answers.
The document discusses net worth and how it is calculated. It defines net worth as assets minus liabilities. Assets are divided into liquid, semi-liquid, and non-liquid categories. Liabilities are divided into short-term and long-term debts. The document also discusses debt-to-equity ratios and strategies for increasing net worth such as higher investment returns, reducing debt, and saving more regularly. Two examples of calculating net worth statements and debt-to-equity ratios for individuals are provided.
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Groups are defined by all of the following characteristics except.pdfvickyaichslg
Groups are defined by all of the following characteristics except:
a. The members are mutually dependent on each other.
b. There is recognition that people belong to a collective entity.
c. There are rules and roles that control people
Solution
Soln:
The answer is e because group membership requires conformance to group norms and group
needs are more important than people\'s personal needs.Therefore e is not characteristic of a
group..
Graph the function. Find the domain and rangey= 32 (square root o.pdfvickyaichslg
Graph the function. Find the domain and range
y= 3/2 (square root of x+ 3) - 1
1. The domain is ____? Or the domain is all real numbers? Type as an inequalit
2. What is the range? Or is the range all real numbers? Tyke as an inequality
Solution
1) domain is allowed x values
so since we have square root x+3>=0
so domain is -3<=x.
Graham and Harvey (2001) found that _____ and _____ were the two mos.pdfvickyaichslg
Graham and Harvey (2001) found that _____ and _____ were the two most popular capital
budgeting methods. A. Internal Rate of Return; Payback Period B. Internal Rate of Return; Net
Present Value C. Net Present Value; Payback Period D. Modified Internal Rate of Return;
Internal Rate of Return E. Modified Internal Rate of Return; Net Present Value
Solution
Graham and Harvey (2001) found that NET PRESENT VALUE and INTERNAL RATE OF
RETURN were the two most popular capital budgeting methods..
gradational boundaries between different sedimentary rock types can .pdfvickyaichslg
gradational boundaries between different sedimentary rock types can form from?
Solution
Gradational boundaries between different sedimentary rock types can form from:
A) slowing of the current over time
B) a progressive change from one environment to another
C) a gradual rise or fall in sea level
It is formed from all of the above.
Governments are capable of whatA.Creating wealthB.Transferring .pdfvickyaichslg
Governments are capable of what?
A.Creating wealth
B.Transferring wealth
C.Destroying wealth
D.All of the above
E.A and B
F.B and C
Solution
Hi,
The correct answer is A and B
Eplanation: Goverment for most of the part are engaged in the process of creation of wealth and
then distributing it among the masses. It creates wealth through various government-owned
businesses and distributes or transfers them through government jobs.
Gordon Company sponsors a defined benefit pension plan. The followin.pdfvickyaichslg
Gordon Company sponsors a defined benefit pension plan. The following information related to
the pension plan is available for 2014 and 2015.
2014
2015
%
A. Compute pension expense for 2014 and 2015.
B.Prepare the journal entries to record the pension expense and the company’s funding of the
pension plan for both years.
2014
2015Plan assets (fair value), December 31$1,423,863$1,729,413Projected benefit obligation,
January 11,425,9001,629,600Pension asset/liability, January 1285,180Cr.?Prior service cost,
January 1509,250488,880Service cost122,220183,330Actual and expected return on plan
assets48,88861,110Amortization of prior service cost20,37024,444Contributions
(funding)234,255244,440Accumulated benefit obligation, December
311,018,5001,120,350Interest/settlement rate8%8
%
Solution
2014
2015
Service cost
122,220
488,880
Interest (1,425,900 *8%)
114072
130368
Expected Return on plan assets
48,888
61110
Amortization of prior service cost
20370
24,444
Pension expense
305,550
704,802
2014
2015
Service cost
122,220
488,880
Interest (1,425,900 *8%)
114072
130368
Expected Return on plan assets
48,888
61110
Amortization of prior service cost
20370
24,444
Pension expense
305,550
704,802.
Given the x has a Poisson distribution with 0=1.4, what is the proba.pdfvickyaichslg
Given the x has a Poisson distribution with 0=1.4, what is the probability that x=0?
Solution
Possion Distribution
PMF of P.D is = f ( k ) = e- x / x!
Where
= parameter of the distribution.
x = is the number of independent trials
P( X = 0 ) = e ^-0.1 * 0.1^0 / 0! = 0.9048.
Given,6 white tennis balls and 3 red tennis balls in a close box. .pdfvickyaichslg
Given,6 white tennis balls and 3 red tennis balls in a close box.
EVENT:drawing 2 balls of the same color.
1:find probability of drawing 2 balls of the same color?
2:find minimum number of draws without replaced to obtain 2 balls of the same color?
Solution
a) 6C2/9C2 + 3C2/9C2 =15/36 +3/36 =1/2.
GivenDetermine where the function is increasingdecreasing and wh.pdfvickyaichslg
Given:
Determine where the function is increasing/decreasing and where the function is concave
up/concave down. Please show the different steps...don\'t just list the answers.
Solution
df/dx=(x^2-4)4x-2x(2x^2)=0 4x^3-16x-4x^3=0 -16x=0 x=0 f(0)= 0.
Given two random variables X and Y that have joint density f(x,y.pdfvickyaichslg
Given two random variables X and Y that have joint density
f(x,y) = x*e^-x(1+y) for x>0 and y > 0
0 elsewhere
Find UX|y
Solution
f(x,y) = x*e^-x(1+y) for x>0 and y > 0
fX|y=f(x,y)/fX(x)
fX(x)=integ xe-x(1+y)dy
= xe-x(y+y2)
fX|y= xe-x(1+y)/xe-x(y+y2)
=1/y y not equal to -1.
given the situation described, identify the type of smpling. student.pdfvickyaichslg
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according to their progress of their degree program as freshman, soph, jrs and seniors and non
matriculating, then random samples are taken.
Random sampling
systematic sampling
convenience sampling
stratified sampling
cluster sampling
Solution
Stratified sampling. The population is divided into strata (freshmen, etc.) and
random samples taken from each strata..
Given the signal f(t) = 2t, find the exponential Fourier series repr.pdfvickyaichslg
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𝐄𝐱𝐩𝐥𝐚𝐢𝐧 𝐭𝐡𝐞 𝐍𝐚𝐭𝐮𝐫𝐞 𝐚𝐧𝐝 𝐒𝐜𝐨𝐩𝐞 𝐨𝐟 𝐚𝐧 𝐄𝐧𝐭𝐫𝐞𝐩𝐫𝐞𝐧𝐞𝐮𝐫:
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Chapter 2
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Chapter 3
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Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...EduSkills OECD
Andreas Schleicher, Director of Education and Skills at the OECD presents at the launch of PISA 2022 Volume III - Creative Minds, Creative Schools on 18 June 2024.
Andreas Schleicher presents PISA 2022 Volume III - Creative Thinking - 18 Jun...
Guaranteed ReturnMr. Juan Tobias Rich (Toby to his friends) .pdf
1. Guaranteed Return
Mr. Juan Tobias Rich (Toby to his friends) has recently inherited$50,000 from the estate of his
great-aunt. He has never had capital to invest before, so he is not quite sure what to do. His
friend Mr. Richard Stuffy is an investment counselor for a local stock brokerage firm, Bullfinch
and Bearwallow. In their initial talk, Toby said, “I want to invest the entire inheritance, but no
more now. I am living very well on my salary, and I really have no need for the money in the
near-term. My goal is to combine this with a good chunk of my future raises, so that I can retire
early— in 25 years or so.” Richard believes Toby will follow his savings plan. Toby in two years
saved enough for the down payment on a house, which he purchased last year.
Toby’s capital is too limited for many forms of independent investment. On the other hand, his
possibilities go far beyond a certificate of deposit or a few shares of stock. As is normal practice
with new clients, Richard has developed three distinctly different investment alternatives (in this
case, each is for $50,000). Richard uses his client’s reactions to the investment choices to
develop clearer goals for each client’s investment strategy.
The first of these alternatives is the financing of a second mortgage on a commercial structure.
The risk on this investment is relatively low because the loan is secured by the building. It runs
for a 25-year period, with annual payments at a 15% annual rate. The borrower pays the cost of
title and fire insurance as well as the fees to the bank that acts as the intermediary for payments.
The second alternative is the purchase of 25-year bonds issued by the local power authority.
These bonds carry a face rate of 9% with interest paid annually. However, interest rates for this
class of bond have risen in recent years (currently 11%) so that the bonds are selling at a discount
from their face value. The power authority has recently announced some cost overruns on the
nuclear facility that is under construction. In reaction to this news and fearful of more substantial
problems, their bonds in particular are being discounted more heavily—to correspond to a 14%
rate of return. Thus, if the bonds are paid off, this is a rare opportunity, but there is some risk of
default.
The third alternative is as a limited partner in a business run by some friends of Toby and
Richard. The business is a spin-off from a local high-tech firm, which is still in the embryonic
stage. Their friends hope to take the firm public (sell stock and become publicly held) within
three years. At this point, the investor’s capital would be returned with substantial interest.
However, the company may go bankrupt instead. If this happens, Toby can expect to get back
about 20 cents on the dollar. Although many intermediate states are possible, Richard believes
2. that the two extreme possibilities provide adequate guidance. He estimates that there is a 40%
chance of success and that the original investment will increase tenfold if the investment is a
success.
Toby’s (8%) mortgage is his only outstanding debt. Therefore, a fourth alternative would be to
pay $50,000 of it off early. Each of these investments has a higher rate of return, but he is not
certain how he should pick the right one. The question is further complicated by Richard’s
comment that the current capital shortage has pushed interest rates and other returns up from the
normal rate of 10% for relatively risk-free investments.
For your initial post, respond to the following questions.What steps would you first take to
perform an after taxes analysis to determine a better investment for the following example:
Toby is in a 35% bracket for income taxes (state and federal combined), and only 40% of a
capital gain is likely to be taxable at retirement.
Note:You are not required to perform the calculation, you are only required to discuss how you
would come to your conclusions.Describe the relationship of risk to return for the three
investments. Are all three investments on the “efficient frontier” for the risk/return trade-off?
Justify your reasoning.
Guaranteed Return
Mr. Juan Tobias Rich (Toby to his friends) has recently inherited$50,000 from the estate of his
great-aunt. He has never had capital to invest before, so he is not quite sure what to do. His
friend Mr. Richard Stuffy is an investment counselor for a local stock brokerage firm, Bullfinch
and Bearwallow. In their initial talk, Toby said, “I want to invest the entire inheritance, but no
more now. I am living very well on my salary, and I really have no need for the money in the
near-term. My goal is to combine this with a good chunk of my future raises, so that I can retire
early— in 25 years or so.” Richard believes Toby will follow his savings plan. Toby in two years
saved enough for the down payment on a house, which he purchased last year.
Toby’s capital is too limited for many forms of independent investment. On the other hand, his
possibilities go far beyond a certificate of deposit or a few shares of stock. As is normal practice
with new clients, Richard has developed three distinctly different investment alternatives (in this
case, each is for $50,000). Richard uses his client’s reactions to the investment choices to
develop clearer goals for each client’s investment strategy.
The first of these alternatives is the financing of a second mortgage on a commercial structure.
The risk on this investment is relatively low because the loan is secured by the building. It runs
for a 25-year period, with annual payments at a 15% annual rate. The borrower pays the cost of
3. title and fire insurance as well as the fees to the bank that acts as the intermediary for payments.
The second alternative is the purchase of 25-year bonds issued by the local power authority.
These bonds carry a face rate of 9% with interest paid annually. However, interest rates for this
class of bond have risen in recent years (currently 11%) so that the bonds are selling at a discount
from their face value. The power authority has recently announced some cost overruns on the
nuclear facility that is under construction. In reaction to this news and fearful of more substantial
problems, their bonds in particular are being discounted more heavily—to correspond to a 14%
rate of return. Thus, if the bonds are paid off, this is a rare opportunity, but there is some risk of
default.
The third alternative is as a limited partner in a business run by some friends of Toby and
Richard. The business is a spin-off from a local high-tech firm, which is still in the embryonic
stage. Their friends hope to take the firm public (sell stock and become publicly held) within
three years. At this point, the investor’s capital would be returned with substantial interest.
However, the company may go bankrupt instead. If this happens, Toby can expect to get back
about 20 cents on the dollar. Although many intermediate states are possible, Richard believes
that the two extreme possibilities provide adequate guidance. He estimates that there is a 40%
chance of success and that the original investment will increase tenfold if the investment is a
success.
Toby’s (8%) mortgage is his only outstanding debt. Therefore, a fourth alternative would be to
pay $50,000 of it off early. Each of these investments has a higher rate of return, but he is not
certain how he should pick the right one. The question is further complicated by Richard’s
comment that the current capital shortage has pushed interest rates and other returns up from the
normal rate of 10% for relatively risk-free investments.
For your initial post, respond to the following questions.What steps would you first take to
perform an after taxes analysis to determine a better investment for the following example:
Toby is in a 35% bracket for income taxes (state and federal combined), and only 40% of a
capital gain is likely to be taxable at retirement.
Note:You are not required to perform the calculation, you are only required to discuss how you
would come to your conclusions.Describe the relationship of risk to return for the three
investments. Are all three investments on the “efficient frontier” for the risk/return trade-off?
Justify your reasoning.
Guaranteed Return
Mr. Juan Tobias Rich (Toby to his friends) has recently inherited$50,000 from the estate of his
great-aunt. He has never had capital to invest before, so he is not quite sure what to do. His
4. friend Mr. Richard Stuffy is an investment counselor for a local stock brokerage firm, Bullfinch
and Bearwallow. In their initial talk, Toby said, “I want to invest the entire inheritance, but no
more now. I am living very well on my salary, and I really have no need for the money in the
near-term. My goal is to combine this with a good chunk of my future raises, so that I can retire
early— in 25 years or so.” Richard believes Toby will follow his savings plan. Toby in two years
saved enough for the down payment on a house, which he purchased last year.
Toby’s capital is too limited for many forms of independent investment. On the other hand, his
possibilities go far beyond a certificate of deposit or a few shares of stock. As is normal practice
with new clients, Richard has developed three distinctly different investment alternatives (in this
case, each is for $50,000). Richard uses his client’s reactions to the investment choices to
develop clearer goals for each client’s investment strategy.
The first of these alternatives is the financing of a second mortgage on a commercial structure.
The risk on this investment is relatively low because the loan is secured by the building. It runs
for a 25-year period, with annual payments at a 15% annual rate. The borrower pays the cost of
title and fire insurance as well as the fees to the bank that acts as the intermediary for payments.
The second alternative is the purchase of 25-year bonds issued by the local power authority.
These bonds carry a face rate of 9% with interest paid annually. However, interest rates for this
class of bond have risen in recent years (currently 11%) so that the bonds are selling at a discount
from their face value. The power authority has recently announced some cost overruns on the
nuclear facility that is under construction. In reaction to this news and fearful of more substantial
problems, their bonds in particular are being discounted more heavily—to correspond to a 14%
rate of return. Thus, if the bonds are paid off, this is a rare opportunity, but there is some risk of
default.
The third alternative is as a limited partner in a business run by some friends of Toby and
Richard. The business is a spin-off from a local high-tech firm, which is still in the embryonic
stage. Their friends hope to take the firm public (sell stock and become publicly held) within
three years. At this point, the investor’s capital would be returned with substantial interest.
However, the company may go bankrupt instead. If this happens, Toby can expect to get back
about 20 cents on the dollar. Although many intermediate states are possible, Richard believes
that the two extreme possibilities provide adequate guidance. He estimates that there is a 40%
chance of success and that the original investment will increase tenfold if the investment is a
success.
Toby’s (8%) mortgage is his only outstanding debt. Therefore, a fourth alternative would be to
pay $50,000 of it off early. Each of these investments has a higher rate of return, but he is not
certain how he should pick the right one. The question is further complicated by Richard’s
comment that the current capital shortage has pushed interest rates and other returns up from the
5. normal rate of 10% for relatively risk-free investments.
Guaranteed Return
Mr. Juan Tobias Rich (Toby to his friends) has recently inherited$50,000 from the estate of his
great-aunt. He has never had capital to invest before, so he is not quite sure what to do. His
friend Mr. Richard Stuffy is an investment counselor for a local stock brokerage firm, Bullfinch
and Bearwallow. In their initial talk, Toby said, “I want to invest the entire inheritance, but no
more now. I am living very well on my salary, and I really have no need for the money in the
near-term. My goal is to combine this with a good chunk of my future raises, so that I can retire
early— in 25 years or so.” Richard believes Toby will follow his savings plan. Toby in two years
saved enough for the down payment on a house, which he purchased last year.
Toby’s capital is too limited for many forms of independent investment. On the other hand, his
possibilities go far beyond a certificate of deposit or a few shares of stock. As is normal practice
with new clients, Richard has developed three distinctly different investment alternatives (in this
case, each is for $50,000). Richard uses his client’s reactions to the investment choices to
develop clearer goals for each client’s investment strategy.
The first of these alternatives is the financing of a second mortgage on a commercial structure.
The risk on this investment is relatively low because the loan is secured by the building. It runs
for a 25-year period, with annual payments at a 15% annual rate. The borrower pays the cost of
title and fire insurance as well as the fees to the bank that acts as the intermediary for payments.
The second alternative is the purchase of 25-year bonds issued by the local power authority.
These bonds carry a face rate of 9% with interest paid annually. However, interest rates for this
class of bond have risen in recent years (currently 11%) so that the bonds are selling at a discount
from their face value. The power authority has recently announced some cost overruns on the
nuclear facility that is under construction. In reaction to this news and fearful of more substantial
problems, their bonds in particular are being discounted more heavily—to correspond to a 14%
rate of return. Thus, if the bonds are paid off, this is a rare opportunity, but there is some risk of
default.
The third alternative is as a limited partner in a business run by some friends of Toby and
Richard. The business is a spin-off from a local high-tech firm, which is still in the embryonic
stage. Their friends hope to take the firm public (sell stock and become publicly held) within
three years. At this point, the investor’s capital would be returned with substantial interest.
However, the company may go bankrupt instead. If this happens, Toby can expect to get back
about 20 cents on the dollar. Although many intermediate states are possible, Richard believes
that the two extreme possibilities provide adequate guidance. He estimates that there is a 40%
chance of success and that the original investment will increase tenfold if the investment is a
success.
6. Toby’s (8%) mortgage is his only outstanding debt. Therefore, a fourth alternative would be to
pay $50,000 of it off early. Each of these investments has a higher rate of return, but he is not
certain how he should pick the right one. The question is further complicated by Richard’s
comment that the current capital shortage has pushed interest rates and other returns up from the
normal rate of 10% for relatively risk-free investments.
For your initial post, respond to the following questions.
Solution
I would first calculate the per year before tax return generated by each of the three investments,
the first alternative provides a return of 15%,the second alternative provides a return of 14% and
the third alternative provides a substantial rate of return of almost ten times. Then I would find
the after tax return for each of the alternative, on the second alternative and the third one there
are capital gains tax and also there is income tax return on the first and the second alternatives,
this taxes would led to lowest after tax return for the second alternative, and the maximum after
tax return for the third alternative. Thus we compare the after tax returns.
When the Risk is considered the picture is entirely different, the first alternative has some risk of
default by borrowers but the mortgage is secured by building makes the risk very low, the second
alternative has some risk of default and the interest rate risk. The risk involved in the third
investment is substantial there is a 60% chance of the alternative being a failure with payoff of
just 20% of the invested amount. Considering risk wise the first alternative seems to have least
risk while the third alternative has the most risk.
When combining the after tax return and risk prospective into one:
Highest
Medium
Lowest
After tax return
alternative 3
alternative 1
alternative 2
Risk
alternative 3
alternative 2
alternative 1
Seeing from above analysis in the table we see that comparing the Return/risk for each
7. alternative we see that alternative 1 is most suitable with Medium return and lowest risk.
The risk returns trade-off for the fourth investment and the risk-free investments should be
compared with the above three investment's risk return trade off, the investment with the best
return to risk payoff should be given final consideration.
“efficient frontier” is the set of portfolios where the return is the maximum for a given amount of
risk given a portfolio of investments. It’s possible to construct a portfolio of diverse investments
that can replicate the risk of any of the above alternative investments and then maximise the
return for a given set of weights of investments in the portfolio, therefore its always possible to
construct a portfolio which maximises a return for a given amount of risk(risk of each alternative
here), the above alternative investments need not lie on the “efficient frontier” for the risk/return
trade-off because it’s always possible to have a portfolio that matches with the risk of the given
alternatives and that provides a larger return than each of the alternatives.
Highest
Medium
Lowest
After tax return
alternative 3
alternative 1
alternative 2
Risk
alternative 3
alternative 2
alternative 1