Calculate the risk premium of Qantas acquiring a A380 Airbus which has an E(R) = 15% where the yield on 10 year Government bonds is 5%.

(type in your answer as a integer only, without the %. e.g. if you answer is 0%, type in 0 only)

T3 EIC 6 (Tutorial)

Your next meeting is for share acquisition. You've been tasked to

provide the value of two shares currently trading in the market.  

A dividend is income paid by a share. All shares are typically valued

as ordinary perpetuities as no share guarantees a dividend payment upon

purchase of the share. 

Berkshire Hathaway does not intend to sell the share after purchase. Value each share, compare it to the current price and provide a recommendation on which is the best buy, use a 5.5% discount rate. 

T3 EIC 5 (Tutorial)

You've just joined Berkshire Hathaway

(Warren Buffet's fund) as a business analyst graduate recruit and there are

several meetings you are to attend for the day. Prior to the meetings you must

do preparation work for each meeting.

Your first meeting is in property

investment. Two similar property leases are on the market, and you are required

to provide basic valuation of rental cash flows and a recommendation

regarding what price to pay for each lease. Real estate agents are taking bids

from prospective buyers now.

The price to purchase each lease is $350 mil. 

Value each lease and provide a

recommendation on which to buy. The current WACC of Berkshire Hathaway is 10% and there are no capital constraints.

T3 EIC 8 (Tutorial)

Your final meeting is in product development. Berkshire

Hathaway wishes to develop a new annuity product for retirees, to provide a

regular annual

income after retirement. This is achieved by the retiree taking out their

superannuation (retire savings) out in a lump sum and depositing it with the

fund. This lump sum investment will be invested in a portfolio that returns 6%

per annum. These returns, along with the original investment amount, will be

drawn down (paid out) at the end of each year to provide retirement income.

The aim is to provide $80,000 annually, for 20 years. How much

(superannuation lump sum) would a retiree need to have at the time

of retirement to deposit into this product? Sales can than provide this

information to potential customers.

T3 EIC 4 (Lecture)

Annuity 1: A car lease that runs

for 1.5 months, starts today and requires weekly payments of $840 in arrears. A

discount rate of 12% p.a. applies.

Annuity 2: A 3 month pre-paid phone plan starts in 1 month’s time and has payments in advance of

$30. A discount rate of 6% p.a. applies.

Which of the following n and i variable sets are correct to calculate the present value at the start of the above annuities? 

(select all correct answers only, selecting a wrong answer will incur a penalty to the effect that selecting all options will earn 0 marks)

T3 EIC 1 (Lecture)

A residential lease starting today, requires monthly payments of $600 in advance and has a term of half a year. 

A discount rate of 6% p.a. applies. Using monthly payments, which of the following variable sets is correct to calculate Present Value, today?

T3 EIC 2 (Lecture)

A residential lease starting today, requires monthly payments of $400 in advance and has a term of half a year. 

A discount rate of 3% p.a. applies. What is the Present Value of this annuity?

(enter your answer without $ or % or commas, to 2 decimal places. e.g. 888.88)

T2 KCT 6 (Tutorial)

Dad says ... 

Lets move on to home loans. While we

don’t have to pick one yet, I’m trying to understand the different terms.

Mum says...Can you tell us which one of these loans is the most expensive? (Hint: calculate the EAR, to display 4 decimal places, for each loan to allow comparison)

ME

Bank:    7.15% p.a., interest paid

weekly.

YOU

Bank:  7.17% p.a., interest paid

fortnightly.

WE

Bank:    7.18% p.a., interest paid monthly.

T2 EIC 5 (Tutorial)

Upon

hearing that you are receiving a financial education, your parents call a

family meeting to include you in the discussion of some important financial

decision making. D

We are thinking of buying a new

house in 5 years. The bank estimates the deposit for what is in our price range

to be $100,000. They are also offering us a term deposit for 5 years to save up

for the deposit.

Mum pulls out the term-deposit

brochure and says... 

The interest on the term deposit

is 4.5% p.a. paid and compounded quarterly. But we don't know how much we need to invest

now so that we hit our deposit target. 

T2 EIC 1 (Lecture)

An Asset has a value of $100. Which of

the following