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Investment Planning 1 As3002 (isabella) - Help needed for Q3a ii & iii

Discussion in 'Financial Planning' started by Jayc, 27th Feb, 2012.

  1. Jayc

    Jayc Member

    Joined:
    27th Feb, 2012
    Posts:
    10
    Location:
    Melbourne
    Hi Guys,

    I'm currently doing my Ip1 assignment and would like to know if i am on the right track for question 3a ii & iii.

    This is my answer for Q3a ii & iii

    PV + 20,665/1.075 + 21.307/(1.075^2) + 21,862/(1.075^3)
    = $55,258.90

    NPV = 20,665/1.075 + 21,307/(1.075^2) + 21,862/(1.075^3) + 575,000/(1.075^3)
    = $38,110.06

    NPV = -480,000 +20,665/1.10382 + 21,307/(1.10382^2) + 21,862/(1.10382^3) + 575,000/(1.10382^3)
    = 0

    but i am not sure how to get the IRR.

    Could someone assist, it would be appreciated

    Cheers
    jeremy
     
  2. fezzah

    fezzah Member

    Joined:
    14th Nov, 2011
    Posts:
    6
    Location:
    Melbourne, VIC
    Take a look, this is what I got and it seemed to work.

    Q3 Aii) Calculate to the nearest dollar the present value (PV) and net present value (NPV) of Isabella’s investment property. Please provide the formula used and all workings.
    Year 1 Year 2 Year 3
    PV = PMT + PMT + PMT
    (1+I) (1+I) ² (1+I) ³

    = 20665 + 21307 + 21862 + 575000
    (1+0.075).... (1+0.075)²............ (1+0.075)³
    = 20665 + 21307 + 21862 + 575000
    (1.075)....... (1.1556)................ (1.2423)
    = 19223.26 + 18438.04 + 480449.17
    = $518,110.47

    The NPV is calculated by deducting the original investment of $480,000 from the present value. Therefore the NPV is:
    $518,110.47 - $480,000
    = $38,110.47


    iii)IRR Calculation
    PV = 20665÷1+.104 + 21306÷(1+.104)2 + 596862÷(1+.104)3
    = $479,774.66
    =10.4% or .104

    Hope this helps.
     
  3. gar26lw

    gar26lw Member

    Joined:
    16th Sep, 2012
    Posts:
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    Location:
    QLD
    Yes, I am also interested in this. Can anyone give any tips?

    At first I thought I'd need to do a section of an SOA followed by several appendices detailing before and after financial status and projected outcomes of investment recommendations. Now I'm not so sure.
    Now I am thinking I need only specifically answer each part of the question with a few paragraphs and supporting workings -the appendices, since it is stated that an SOA is not needed BUT maybe that means just not a full one and like first thought, part of one.

    Can anyone who has passed enlighten us?

    I dont really want to find out by submitting and then gettting a knockback

    Much appreciated.
    I am happy to reciprocate with FFP and RM help if needed.

    cheers

    G
     
    Last edited by a moderator: 28th Sep, 2012
  4. gar26lw

    gar26lw Member

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    16th Sep, 2012
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    QLD
    finished this assignement, so all good, cheers anyway

    g
     
  5. mikea1988

    mikea1988 New Member

    Joined:
    8th Aug, 2012
    Posts:
    4
    Location:
    melb
    hey guys

    Im struggling to get my head around the impact of a discount rate used with advantage health services having low debt.

    vi) This company has significantly lower levels of debt than other companies in the same industry. Discuss the impact this could potentially have on the discount rate used to price this IPO.

    what have you came up with??

    your help is greatly appreciated
     
  6. gar26lw

    gar26lw Member

    Joined:
    16th Sep, 2012
    Posts:
    5
    Location:
    QLD
    think about leverage in company, comparison to other companies in the biotech area. take a look at page 9:9

    :)

    gar