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There are many different scenarios that we have to determine the most productive way of deploying capital, such as: buying versus leasing a car, buying insurance whole life versus term, and of course buying versus renting a home. You are to create a spreadsheet that tracks the cash flows of a person that had a home buying experience over a 10 year period and determine whether they would have been better off buying or leasing their home and investing in some other investment. The scenario is as follows: Pick a house from Zillow, Realtors.com, or any other website that sold in 2007. Include the a print of the page. Assume you sell the property today based on current estimate. The house was bought with an 80% mortgage with an 4% interest rate and 30 year amortization. Taxes and insurance in the first year were 2.2% of the purchase price. Initial rent is based on estimate by Zillow as a percentage of your current value. The investment can be anything you like, S&P Index, Home Depot Stock, gold, etc (if you pick a stock, it cannot be more than 25% of your total portfolio). If you use a specific stock, you must track price, splits and dividends. Take the cash flows from the houses over time and compare that to the cash flows that you would have received had you not bought a house but rented a home and invested instead. You should use various metrics to determine which worked out better. NPV, IRR, Annual Cash on Cash Return and any other metric that you decide is useful. If you have to add cash then add to your alternative investment if cash comes out of the real estate then it comes out for both investments.
Essary Enterprises has bonds on the market making annual payments, with eight years to maturity, a par value of $1,000, and selling for $952. At this price, the bonds yield 6.1 percent. What must the coupon rate be on the bonds?
ICU Window, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with nine years to maturity that is quoted at 117 percent of face value. The issue makes semiannual payments and has an embedded cost of 11 percent annua..
Mary purchased 200 shares of Harley Davidson Co. stock at a price of $100.00 six months ago. What is Mary’s holding period return?
What is the yield to call of a 30-year to maturity bond that pays a coupon rate of 11.98 percent per year, has a $1,000 par value, and is currently priced at $918? The bond can be called back in 7 years at a call price $1,089. Assume annual coupon pa..
TIPS Capital Return Consider a 4.50% TIPS with an issue CPI reference of 188.50. At the beginning of this year, the CPI was 199.30 and was at 206.00 at the end of the year. What was the capital gain of the TIPS in dollars?
how much stock would they have to sell if flotation costs are expected to be 15%? The flotation cost adjusted initial outlay.
What is the value of the bond? What is its value if the interest is paid annually and semiannually - What is the bond's yield to maturity?
Prepare a valuation model for 5 year and terminal value. Determine XYZ’s FCFF per share and FCFE per share?
Ngala Ltd. currently has no debt in their capital structure. They are considering recapitalizing the firm and adding about 25% debt. The loan requires an interest rate of 7%. The firm is in the 35% tax bracket. Currently, the firm has a beta of 1.02...
Select two publicly traded companies in different industries/sectors, then compose a comparison of the capital structure for each. Explain your conclusions on the similarities and differences. What factors can you suggest for why each company adheres..
Just-in-time Inventory Management systems began to appear in the United States in the Late 1970’s manufacturing space.
Fama’s Llamas has a weighted average cost of capital of 9.3 percent. The company’s cost of equity is 13 percent, and its pretax cost of debt is 7.3 percent. The tax rate is 40 percent. What is the company's debt-equity ratio?
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