Advise on the main asset classes available in Zambia clearly showing the common investment time horizon for each. What is the most money you could make over the next year?
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Mr. New Retiree is about to retire after an illustrious career in the Zambian civil service. He is expecting to receive a net of K2.5 million in retirement benefits. As an Investment Advisor, you have been approached by Mr. New Retiree to advise on the options available for him to consider.
- Advise on the main asset classes available in Zambia clearly showing the common investment time horizon for each.
- What is the most money you could make over the next year?
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- a) As an investment advisor, you have been approached by a client called Mr. Sobolo, who wants some help in investment-related matters.Mr. Sobolo is currently 45 years old and has Gh₵600,000 in the bank. He plans to work for 15 more years and retire at the age of 60. Mr. Sobolo's present salary is Gh₵ 400,000 per year. He expects his salary to increase at the rate of 12 per cent per year until his retirement.Mr. Sobolo has decided to invest his bank balance and future savings in a portfolio in which stocks and bonds would be equally weighted. For the sake of simplicity, assume that these proportions will be maintained by him throughout. He also believes that bonds would provide a return of 7 per cent and stocks a return of 13 per cent. You concur with his assessment.Once Mr. Sobolo retires at the age of 60 he would like to withdraw Gh₵500,000 per year from his investments for the following 15 years as he expects to live up to the age of 75 years. He also wants to bequeath Gh₵ 1,000,000…As an investment advisor, you have been approached by a client called Ramesh, who wants some help in investment related matters. Ramesh is currently 45 years old and has Rs 600,000 in the bank. He plans to work for 15 more years and retire at the age of 60. Ramesh's present salary is Rs 400,000 per year. He expects his salary to increase at the rate of 12 percent per year until his retirement. Ramesh has decided to invest his bank balance and future savings in a portfolio in which stocks and bonds would be equally weighted. For the sake of simplicity, assume that these proportions will be maintained by him throughout. He also believes that bonds would provide a return of 7 percent and stocks a return of 13 percent. You concur with his assessment. Once Ramesh retires at the age of 60 he would like to withdraw Rs 500,000 per year from his investments for the following 15 years as he expects to live upto the age of 75 years. He also wants to bequeath Rs 1,000,000 to his children…As an investment advisor you have been approached by a client called Ramesh, who wants some help in investment related matters. Ramesh is currently 45 years old and has Rs 6, 00,000 in the bank. He plans to work for 15 more years and retire at the age of 60. Ramesh’s present salary is Rs 4, 00,000 per year. He expects his salary to increase at the rate of 12% per year until his retirement. Ramesh has decided to invest his bank balance and future savings in a portfolio in which stocks and bonds will be equally weighted. Assume that these proportions will be maintained by him throughout. He also believes that bonds will provide a return of 7% and stocks a return of 13%. Once Ramesh retires at the age of 60 he would like to withdraw Rs 5,00,000 per year from his investments for the following 15 years as he expects to live up to the age of 75 years. He also wants to give Rs 10, 00,000 to his children at the end of his life. How much money would he need 15 years from now? How much should…
- Linda Jackson, a financial analyst at Ken and Bradley, a leading real estate firm, is thinking about recommending that Ken and Bradley invest in a piece of land that costs K85,000. She is certain that next year the land will be worth K91,000, a sure K6,000 gain. Given that the guaranteed interest rate in the bank is 10 percent, should Ken and Bradley undertake the investment in land?Mr Shikongo just has identified three investment opportunities that he is considering.One is investment A that is expected to pay N$800 a year for three years, followed by N$1 000 per year for four years. It will pay N$2 000 at the end of the eighth year. Investment B is expected to pay N$6 000 at the end of the fourth year followed by N$800 indefinitely. Investment C will pay N$2 000 at the end of year 2, N$1 000 at the end of Year 3, followed by N$800 at the end of year 4, which will grow by 2% indefinitely.Mr Shikongo has a required return of 10% on all his investments.REQUIRED: MARKS1.1 What is the maximum amount of money that Shikongo would pay for investment A at the start of year 3? 1.2 What is the maximum amount of money that Shikongo would be willing to pay for investment A, today? 1.3 Calculate the present value of Investment B as at Year 0. 1.4 Calculate the market value of Investment C today.Mr. Partho, who is 30 years old, has approached a financial planner for analysis of his retirement needs and wishes to start saving now towards this goal. He will retire at age 55. Life expectancy is assumed to be 75 years. Present annual expenses are Rs. 3,00,000 and he wishes to maintain the same standard of living after retirement. The rate of return expected on investments is 12% per annum and the average inflation rate is assumed to be 5% per annum throughout the phase. How much does he need to save every month in order to maintain the same standard of living even after retirement? Please provide detailed answer
- After completing a long and successful career as senior vice president for a large bank, you arepreparing for retirement. After visiting the human resources office, you have found that you haveseveral retirement options: (1) you can receive an immediate cash payment of $1 million, (2) youcan receive $60,000 per year for life (your remaining life expectancy is 20 years), or (3) you canreceive $50,000 per year for 10 years and then $70,000 per year for life (this option is intended togive you some protection against inflation). You have determined that you can earn 8 percent onyour investments. Which option do you prefer and why?Nick has been offered a unique investment opportunity. If Nick invests $10,400 today, Nick will receive $600 one year from now, $1,690 two years from now, and $12,400 ten years from now. (a) If the cost of capital is 6.7% per year, the NPV is $ SHould he take this opportunity? (b) If the cost of capital is 3.2% per year, the NPV is $ SHould he take this opportunity?You are a young urban professional in your late 20’s and want to save up for your wedding and other life milestones. You decide to invest one million USD at the start of the year in a financial instrument that gives 10,000 every June 30 and an undisclosed amount every December 31. The amount to be given is undisclosed because it will depend on the performance of the financial instrument in the market. You intend not to withdraw this investment until you die. Assuming an MARR of 9% per semi-annual, compounded semi-annually, compute for the minimum acceptable value X to be paid every December 31.
- A long time ago Lisa had put an amount of $50,000 into an investment in the securities market. Now she has $150,000 in her investment account. Required: If the average rate of return Lisa earned for the investment is 7.6% per year, how many years she has maintained the investment so far? If Lisa would have wished to obtain the target of $150,000 within 10 years only, how much money should she put into the initial investment given the same rate of return is applied? Assume that Lisa would like to put the amount of $150,000 into another investment and aims for a new saving target of $500,000 to buy a new house in 12 years. How much is the rate of return should Lisa aim for to get her $500,000 after 12 years? Lisa has another option for her plan to buy a new house: Using $150,000 as a deposit and get a mortgage from a bank to buy the new house. ANZ bank offered Lisa the lending interest rate of 4.85% per year, compounding semi-annually. Commonwealth Bank offered her a lending rate of…Suppose a husband wants to take his wife on a trip three years from now to Europe to celebrate their 40th anniversary. He has just received a $24,000 inheritance from an uncle and intends to invest it for the trip. The husband estimates the trip will cost $31,000 and he believes he can earn 8% interest, compounded annually, on his investment. Complete the following table to calculate the future value. Will he be able to pay for the trip with the accumulated investment amount? Note: Use tables, Excel, or a financial calculator. Round your final answers to the nearest whole dollar amount. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)A) Rick is thinking about quitting his current job, which pays a salary of $54,000 per year, to own and operate his own business. If he starts the business, he expects to spend $230,000 to purchase physical capital. This amount of money would come from two sources: $110,000 from a bank loan at an interest rate of 7% per year and $120,000 from Rick's savings, which are currently invested in stocks that are equally risky as his intended business and earning 11% per year. The physical capital is expected to have useful life of 10 years and a scrap value of $25,000. Rick expects to spend $130,000 per year on assistants and to pay himself a salary of $23,000 per year while operating his business. His business is expected to earn total revenues of $260,000. After learning that Rick might quit, his employer offers him a salary of $62,000 per year to convince him to stay at his current job. The expected annual accounting profit of Rick's intended business is $__________ B) Rick is thinking…
