1.

Lesson 8

Max 32- Wife 29/ with 3 children 2,8,9

LI cover until she’s 70, he’s 60, children until 22

Couple expenses 4200*12, children 1000*3*12

Mortgage 620000, Car loan 64000, funeral cost 15000, administration cost 4000, wedding 70000*12*3,
superannuation- max (190000), wife (120000)

Max Wife

4200*12*(70-29) = 2066400 4200*12*(60-32) = 1411200

1000*12*(22-2) =240000

1000*12*(22-8) = 168000

1000*12*(22-9) =156000 = 564000 = 564000

=620000

=64000

=15000

=4000 =703000

70000*3 = 210000 =210000

=(190000) =(120000)

Total =3353400 =2768200

2. Lesson 9

Sharma- 68, single, apply for Centrelink

5 years- gifted 60000 saving for adult children, investment property mortgage 25000- earn 12000 per
year, fund- 100000, owns residential home 400000

b.

Assessable income= 12000 Demand = Gift 30000 (60000-30000) pg12

 Sup 100000

Fund 20000

Shares 15000

Savings 6000

Bonds 3000 (16000-13000) pg12

Total= 174000

51200*0.0175 = 896

122800*0.0325= 3991 =4887

Total= 16887 (per annum)

(No of weeks-26) = 16887/26 =649.50 [1yr- 52 weeks: 6 months- 52/2=26]

3.

4.

Selina-20, buy home 33, apartment price 450000 with 3.5% growth rate per annum, stamp duty 4%,
deposit 20% when purchase

a. Property value (PV)= $450000 average apartment price

I = 3.5% growth rate
n = 13 time(33-20)
stamp duty= 4% of the apartment price
deposit= 20% of the apartment price
Interest rate= 1.5% (compounded monthly)

Step 1

Calculate the apartment price after 13 years. Apartment grow at a rate of 3.5% per annum.

FV of the apartment= 450000*(1+3.5%)^13 =$703780

Step 2
Calculate the total value of the stamp duty & the deposit

Stamp duty = 703780*4% =$ 28151

Deposit of 20% = 703780*20% =$ 140756

Total= = $ 168907

Step 3

Calculate the FV of her current savings so she can deduct that amount from the total amount that she
needs in 13 years to afford the recommended deposits and stamp duty

PV= 20000 current a/c balance

n= 13*12 =156 in month

i= 1.5%*12 =0.125% per month

FV of the current deposit= 20000*()1+0.125%)^156 =$24303

Calculate the additional amount that she needs after considering the FV of her savings

= 168 907-24303 =$144604

Step 4

Calculate how much money will she need to put not her bank account per month over the next 13 years
to afford to recommended deposit stamp duty

FV= $144604

n=156 months

i= 0.125% (monthly)

FV= CF ((1+r)^n-1)/r 144604= pmt (1+0.125)^156-1/0.125% pmt= $839.92

05)

a)

Salary 70 000 (per year)

70% = 0.7 %

[0.75 * ( $ 75000 *0.7)]

52

=706750

b)

ER=RF+beta [Erm -Rf]

Required return = 1% + 1.4 (8% -1%) = 10.8%

CADM model – RR =RF + beta (Erm -RF)

Do = 6

Roe = 8%

Payout = 70%

Growth in expected divideds= ROE * Retention ration

= 8% *( 1-0.70) = 2.4% Growth = Roe * Retention ration

V= D1/ R-G V = DO * (1+G) / (R-G)

PV = $6 ( 1 +2.4%) / 10.8% -2.4%

PV = $ 6144 / 0.084 =$ 73.1

PV = Divo * ( 1 +g) / r-g

c)

Rp = ( $ 55000-50000) + $ 3000 - $ 1000 / $ 50000 = 14 %

RP = ( (VPend-VPbeg) + Div -MER) / VP beg

Management expenses = 2% $ 50000 = $ 1000

Sharpe ration = 14 -1 /20 = 0.65 per unit of sd risk

Sharpe ratio = Rp -Rf / s TD ( 0.65 OF excess return per unit of risk)

d)

(2300-(11500-10800) * 18% = $288

e)

1. NO – Personal expenses not allowed

2. Yes
3. Yes
4. No -company transfer

f)

(20-8)12*1700 shares = $ 10200 more than 12 = 50% individual

(20-7)12*1800 shares = $ 11700 66.6% superannuation

(20-21)*1500 shares = $ (1500)

Total = 820400

b)

Loan term= 30 years

Annual interest rate = 4.2% (monthly compounded)

After 13 years the value of the apartment = $ 703780

Initial deposit to be made = 703780 *20% = 140 756

The value of the loan required=703780 – 140 756 = $ 563024

Value of the monthly loan installment

Pv=$ 563024

n = 12*30 = 360 months

I = 4.2% /12=0.35% monthly in rate

563 024 - pmt (1+0.35%)^360]/0.35%] pmt= $ 2753.28

c) PMT = $1600 , n =360 , I = 0.35%

the amount that she can borrow today

PV = 1600 * [1-(1+0.35%)^360]/0.35%] = 327 156.87

The maximum value of the home she can afford ( including stamp duty )

Stamp duty = 703780 * 4% = $ 28151

Deposit of 20% = 703780*20% = $ 140156

Pv= 327156.87+140156+28151 = $ 496094

d)

inheritance/property value = $ 500 000

time to build the property = 1 year

net rental per year ( from year 2-8) = 22000

net rental per year ( from year 9-12) = 24000

sell the property at the end of the 12 th year

property value growth = 3% per year from the time it is built

discount rate = 5%

pv = $ 500000 y 1
FV of property in year 12 FV = 500000 [(1+3%)^1)
Property income = $ 500000 = $ 692 116 .94
N = 11 (because it takes 1 year to build the property)

Property value growth rate = 3%

Today’s value of the property under a DR of 5 %

n = 12 pvo = 622 116. 94 ( 1+ 5%) ^ -12

I = 5% PV = 8385396.61

FV = 692 116 .94

Pv of the retail income generated from the property

Pv of rent years 2-8 (deferred annuity)

PMT = $ 22000 pv1 = 22000 *(1-(1+5%)^-7)/5%

N=7 pv1 = $127300.21

I = 5% PVO = 127300.21*(1+5%)^-1 = $ 121 238.29

Pv of rent years 9-12 (deferred annuity)

PMT = $ 24000 pv8 = 24000 *(1-(1+5%)^-4)/5%

N=4 pv8 = $ 85102.81

I = 5% PVO = 85102.81*(1+5%)^-8 = $ 57 600.98

Net present value

NPV= $ 500000 + ($385396.61<TODAYS VALUE OF THE PROPERTY >+$ 121238.29 < PV of the rent 2-8 >+
$ 57600.98<PV pf the rent 9-12>)