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Investment Planning 1 AS3002

Discussion in 'Financial Planning Study Group' started by squeak043, 20th Sep, 2011.

  1. squeak043

    squeak043 Member

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    Having a wee bit of trouble finding the formula to calculate the purchase price of a 10 year government bond parcel as requested in question 2b.

    Can anyone help?
     
  2. Hector

    Hector Member

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    Hi,

    this is what I got

    Purchase price of 10 yr Bond
    PP = C1 / 1 + I, + C2 / (1 + I)2, + C3 / (1 + I)3, + C4 / (1 + I)4, + C5 / (1 + I)5, + C6 + FV / (1 + I)6
    = 3.475 / 1.036 + 3.475 / 1.073 + 3.475 / 1.112 + 3.475 / 1.152 + 3.475 / 1.193 + 3.475 + 100 / 1.236
    = 3.354 + 3.329 + 3.125 + 3.016 + 2.913 + 83.718
    = 99.365
     
  3. Tia

    Tia New Member

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    Q3 a) iii What did you get for the IRR? do we need to include the sale of the property?

    Please help..
     
  4. Hector

    Hector Member

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    IRR

    I really struggled with the IRR, but htis is how I did it which seems the opposite of what the notes tell you to do

    iii) IRR = $480,000 = 20665 / (1 + I) + 21307 / (1 + I)2 + 21862 / (1 + I)3 + 575,000 / (1 + I)3
    10.37% = 20665 / 1.1037 + 21307 / 1.218 + 21862 / 1.344 + 575000 / 1.344
    = 18723.38 + 17491.22 + 16260.60 + 427675.84
    = $480,151.04 Rounded up to 10.4%

    It was marked as correct but I still don't really get it

    regards
     
  5. Tia

    Tia New Member

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    Hey thanks for your help.i got 10.38%
     
  6. squeak043

    squeak043 Member

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    Where did you source this formula from? I cant find it in the subject notes!!
     
  7. squeak043

    squeak043 Member

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    Never mind! Found it, I was looking all through the calculation section... For anyone who is curious its on page 4:34
     
  8. Hector

    Hector Member

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    Yep, that is exactly what I was about to reply. cheers
     
  9. Petrai

    Petrai New Member

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    Investment Planning 1 Assignment Q 5

    Can anyone assit with what they are looking for in Q5 regarding Grace? Happy to assist with other questions? Petrai
     
  10. cammmm

    cammmm New Member

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    25th Oct, 2011
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    Ip1 as3002

    Hi. Have you guys handed in IP1 yet? what was the feedback? I think I have the gist of most of it but mostly worried about Q5. How did you go about layout etc and structuring your answers? Im doing IP1 AS3002, the case study is on Isabella. Keen to hear how you got on or any help on offer?
    Cheers
     
  11. AWILL

    AWILL New Member

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    15th Aug, 2011
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    Question 2 b

    HI Hector, did you pass with this answer? I can see in the notes that the results are rounded up during the second part ( 3.475 / 1.036 + 3.475 / 1.073 + 3.475 / 1.112 + 3.475 / 1.152 + 3.475 / 1.193 + 3.475 + 100 / 1.236
    )but not to any definite number of decimal places...you have used 3 decimal places here...the notes have some up to 5 & 6 decimal places... i was told by the marker that my method was right but that my resulting price was slightly off... my answer was not 99.365 as i did not round everything to 3 decimal places, only when i got to the third part (3.354 + 3.329 + 3.125 + 3.016 + 2.913 + 83.718) before the acutal parcel price. Any help is greatly appreciated...