FIN513 Entrepreneurial Finance: The Quantitative Methods

Questions:

Based on the scenario analysis performed (part 1e), write a report with your advice to Rebeca Young. Explain initially what scenario analysis is, how it is performed, why it is important, commenting also on the shortcomings of such an analysis [15 marks]. Then, you should provide your recommendation based on the quantitative insights gained [15 marks]. Finally, discuss any qualitative considerations that she may wish to factor in her decision [10 marks].
 
Part 1: Submit an Excel file with your computations and answers to the questions set. Your answers should result from formulas and functions; do not simply input a number. Part 2: Submit your report as a Word or Pdf file. This should not exceed 2 pages, excluding any tables and/or references you may wish to use. The format of the report should be Arial font, 11 font size, 1.5 spacing and normal margins around. 
Late Submission: Maximum grade is 89% (B+) No Submission: Maximum grade is 69% (F) 
PART 1 – COMPUTATIONS IN EXCEL (50 marks) 
1.    a)  Determine the required monthly payments for the mortgage. [5 marks] 
2.    b)  Determine the monthly opportunity costs of using the required funds for purchasing the condo (i.e., down payment plus all closing costs), rather than leaving those funds 
invested and earning the equivalent monthly rate determined in part (a). [5 marks] 
3.    c)  Determine the monthly additional payments required to buy versus rent the condo 
(include the monthly opportunity costs determined in part (b)). [5 marks] 
4.    d)  Determine the principal outstanding on the mortgage after:
5.    e)  Determine the net gain (or loss) from selling the condo after 2, 5 and 10 years in present value terms. Base your analysis on the following scenarios which Rebecca Young has determined are possible after performing her due diligence about future real estate prices in the Toronto condo market: 
i.    The condo price remains unchanged. [10 marks] 
ii.    The condo price drops 10 per cent over the next two years, then increases 
back to its purchase price by the end of five years, then increases by 10 per cent from the original purchase price by the end of 10 years. [5 marks] 
 
iii.    The condo price increases by the annual rate of inflation of 2 per cent every year over the next 10 years. [5 marks] 
iv.    The condo price increases by an annual rate of 5 per cent every year over the next 10 years. [5 marks] 

Based on the scenario analysis performed (part 1e), write a report with your advice to Rebeca Young. Explain initially what scenario analysis is, how it is performed, why it is important, commenting also on the shortcomings of such an analysis [15 marks]. Then, you should provide your recommendation based on the quantitative insights gained [15 marks]. Finally, discuss any qualitative considerations that she may wish to factor in her decision [10 marks]. Remember to include appropriate references [5 marks] and pay attention to the report’s presentation [5 marks].

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QUALITY: 100% ORIGINAL PAPER – NO PLAGIARISM – CUSTOM PAPER

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