StudentShare solutions
Triangle menu

Fundamentals of Finance - Essay Example

Nobody downloaded yet

Extract of sample
Fundamentals of Finance

Photos: Interior view of one of the master bedrooms showing a spacious area within the room. The outside view of the property showing a cultivated front yard suited with garbage cans and showing spacious distance from one property block to the next. The arrangement of the apartments allows a personal parking lot to the front and a walk through pavement connecting from the main residential interstate roads. Weblink: www.rightmove.co.uk/property-for-sale/property-41518172.html# Purchasing Price: ?59,500 The annual cash flows expected from the investment target is ?850 per calendar month as the area has competitive rental market given that area is spacious and secluded from industrial zones, hence fore, investors in this area are driven by the market valuation of the properties as well as the location which raises the expected valuation of the property to be higher than the market price. The market price of the same property along the Greater Manchester area is set at ?650 with regards to the proximity of properties and roads, shopping malls, security of the area, and demand and supply of rental properties along the same area. However the expected rental amount from this particular property is ?850 as the property is new, all its features are functional and the seclusion from the industrial areas makes the property higher valued than its market competition counterparts. Therefore, for Mr. Priddin to invest in this property, his annual cash flows are calculated as Annual Cash Flows Expected Investment Target: ?850 Per Calendar Month (PCM) = (?850 x 12) = ?10,200 The rationale of providing rental service for ?850 per month is because; after investigating the rental prices for 2 bedroom flats and apartments around the Little Lever Bolton within the Greater Manchester area, it is found out those property rentals per calendar month range from ?150-700 with regards to conditions and luxury facilities. With regards to the presence of communal gardens and the easy access to ground floor apartments, the prices for these properties are kept higher than the market price at either the threshold of ?700 PCM or above at ?1000. With Mr. Priddin expecting a 6% return on investment, the future value of the property is calculated as Perpetuity = (Rental Price x Months in a year)/r Therefore, If Mr. Priddin is to purchase this property at ?59,500 his annual returns would be Perpetuity = (850*12 months)/r = 10,200/0.06 = ?170,000 Hence fore, the present value of the future cash flows of ?170,000 is higher than the current selling price of ?59,500 and is therefore a good investment for Mr. Priddin to invest in. A) If as a landlord Mr. Priddin would like to keep this property and rent it forever raising the rent at the rate of 4%, is it advisable for Mr. Priddin to purchase this property? Then Using P = Co*(1+g)/r-g his return on investment would be calculated with regards to the purchase price of the property C0 divided by the difference between the return on investment and expected less the rate of rent increase per year. P = C1/r-g P = 59500/6% - 4% P = ?2,975,000 With respect to the present value of the future cash flows of ?2,975,000 the purchase price of the property is lower and therefore the property is still worth buying. The difference between the present value of the property and the future cash f ...Show more
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Fundamentals of Finance Essay Example | Topics and Well Written Essays - 1750 words”, n.d.)
Retrieved from https://studentshare.net/finance-accounting/110552-fundamentals-of-finance
(Fundamentals of Finance Essay Example | Topics and Well Written Essays - 1750 Words)
https://studentshare.net/finance-accounting/110552-fundamentals-of-finance.
“Fundamentals of Finance Essay Example | Topics and Well Written Essays - 1750 Words”, n.d. https://studentshare.net/finance-accounting/110552-fundamentals-of-finance.
  • Cited: 0 times

Summary

Name: Course: Instructor: Date: Fundamentals of Finance Option 1 - Buy to Let Location: Manchester Road, Clifton Description of Property: It is a 2-bedroomed flat positioned along the Manchester Road, Clifton, situated on the ground floor with a kitchen and lounge, has no chain, collective garden, gas central heating, and double glazing, and family bathroom…
Fundamentals of Finance
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the essay on your topic
"Fundamentals of Finance"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Finance
Then, explanations and justifications of the results are discussed with some suggestions for improvements. Product Division Category Ratio 2009 2008 Result Liquidity Ratios Current Ratio 1.33 1.09 Unfavorable Quick Ratio 0.63 0.47 Unfavorable Stock Turnover 113.84 99.51 Favorable Debtor Days 42.69 27.58 Unfavorable Creditors Days 29.15 51.06 Unfavorable Profitability Ratios Net Profit Margin 3.36% 1.98% Favorable Operating Profit Margin 6.38% 5.71% Favorable Return on Assets 3.56% 1.96% Favorable Return on Equity 10.23% - Critical Analysis:- Liquidity which is defined by Lawrence J.
4 pages (1000 words) Essay
Fundamentals of finance
Company summary IITV plc is a media company based in the United Kingdom and cover new, broadcasting and production. The company owns all of the three regional channel licenses in Wales and England. ITV owns ITV1 and ITV2 and has partial interest in GMTV. ITV began its broadcasting in 1955 following the Television Act of 1954 which made commercial television possible in the United Kingdom.
8 pages (2000 words) Essay
Fundamentals of finance
Its first area of operation was London under channel 3 broadcasting licence. ITV Plc came into being in 2004 after a merger between Granada, which had six regional licences and Carlton, which controlled five licences. This led to ITV Plc to control eleven licences in total.
8 pages (2000 words) Essay
Finance
The investors take diversified investment strategy, where they invest their money in national as well as international investment instruments. Here the researcher tends to analyse the key mechanism of international investment diversification. The diversification process in their investments consist of different types of activities viz.
6 pages (1500 words) Essay
Fundamentals of Finance
Under this method of depreciation, it is necessary to consider the asset class lives which should be less than the actual life of the asset, so that the salvage value of such assets should be zero. If a particular property is utilizing for a period of five years or more then the depreciation rate should be calculated in accordance with the following manner.
4 pages (1000 words) Essay
FUNDAMENTALS OF FINANCE
So, we see while the NPV for project A is negative, that for projects B and C are positive and the NPV for project C is by far greater than the NPV
8 pages (2000 words) Essay
Finance
This paper also aims to look at the effect of the financial crisis on the Australian economy, as indicated by the exchange rate for the
9 pages (2250 words) Essay
Fundamentals of Finance
To determine M&S’s position in the global retail industry, these ratios were compared with the industry average. The analysis revealed that despite the drop in
8 pages (2000 words) Essay
FUNDAMENTALS OF FINANCE ASSIGNMENT
That is why its standard deviation is low or almost nil as compared to other classes of asset. Bonds are just like loans. One of primary risk to investor is that borrower be unsuccessful to
9 pages (2250 words) Essay
Choosing a Path 2
My second best choice would be marketing. Therefore, I seek to evaluate my perceived skills and compare them to those required for business finance and marketing to determine my adaptability into either of these career paths. The SJSU online catalog provides critical
3 pages (750 words) Essay
Comments (0)
Click to create a comment
Let us find you another Essay on topic Fundamentals of Finance for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us