Originally, Monash & Co had $10 million in capital of which half is equity. An additional $2 million of equity capital has been injected.

Due to less risk in the international student market, shareholders now need to earn 8% while creditors require a yield of 4%. 

Which of the following projects should Monash & Co. choose to send capital on? You can select multiple projects that allow Monash to spend all of it's capital but the combination of projects should earn a greatest return and you cannot over-spend.

Monash & Co has $10 million in capital of which half is equity. Shareholders need to earn 10% while creditors require a yield of 6%. 

Which of the following projects should Monash & Co. choose to send capital on? Select one project only and the best project.

Telstra has $20 million of debt and total capital of $50 million. If creditors require a 6% return (K_d) from Telstra debt and shareholders require a 8% return (K_e), what is the WACC? 

(Enter in your answer as a number only without the "%". Answer to 2 decimal places)

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 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 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 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)