Business Finance - Study Material and Solved Assignments

This study material provides answers to questions related to Business Finance. It covers topics such as Sydney property price forecast, income growth, mortgage payments, and more. The content is perfect for students of finance and economics.

Running head: BUSINESS FINANCE
Business Finance
Name of the Student:
Name of the University:
Authors Note:

BUSINESS FINANCE
1
Table of Contents
Question 1: (Answer).................................................................................................................2
Question 2: (Answer).................................................................................................................2
Question 3: (Answer).................................................................................................................3
Question 4: (Answer).................................................................................................................3
Question 5: (Answer).................................................................................................................4
Question 6: (Answer).................................................................................................................6
Question 7: (Answer).................................................................................................................6
Reference and Bibliography:......................................................................................................7

BUSINESS FINANCE
2
Question 1: (Answer)
$-
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
$3,500.00
$977.50
$3,014.45
Sydney property price forecaste for next 20 years "000
The graph collectively represents the rising property price in Sydney for the next 20
years, which has been calculated by conducting average of the previous 15 years property
price movement. the analysis relatively helps in detecting the level of growth in property
prices, which could be attained in future and allow our client to achiever Austrian dream (Lee
& Reed, 2014).
Question 2: (Answer)
Year 0
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
Year 7
Year 8
Year 9
Year 10
Year 11
Year 12
Year 13
Year 14
Year 15
Year 16
Year 17
Year 18
Year 19
Year 20
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
$180.00
$200.00
$80.00
$189.50
Income Growth for the clinet next 20 years "000

BUSINESS FINANCE
3
The graph relatively represents the income growth of the client in 20 years
perspective, which is essential to understand the level of saving that will be conducted over
the period. This analysis is relatively detected by calculating the average increment in income
of citizens living in Sydney, who are employed. respectively represent that within 20 years
the income of the client visibility in the group from $80,000 to $189,500.
Question 3: (Answer)
Particulars Monthly Yearly
Salary 6,666.67$ 80,000.00$
Expenses on Amenities 1,360.00$ 16,320.00$
Expenses on rent 850.00$ 10,200.00$
Total expense 2,210.00$ 26,520.00$
Tax $17,547.00
Savings 2,994.42$ 35,933.00$
Particulars Value
Max LVR 80%
Property Value 429,665.00$
Loan From Bank 343,732.00$
Deposit to bank 85,933.00$
The calculations related we represent that the client would eventually save around
2994.42 on monthly basis which could be used for mortgage payments. Moreover, seeing the
savings conducted by the Client or property value of only $429,665 can be bought in the
current situation.
Question 4: (Answer)
Particulars (Without Insurance premium) Value
Max LVR 80%
Property Value 428,275.00$
Loan From Bank 342,620.00$
Deposit to bank 85,655.00$
Stamp Duty 278.00$

BUSINESS FINANCE
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Particulars (With Insurance premium) Value
Max LVR 97%
Property Value 800,000.00$
Loan From Bank 774,250.00$
Deposit to bank 25,750.00$
Stamp Duty 31,767.00$
Insurance Premium 28,416.00$
From the perspective of insurance premiums, the client could effectively by the
property with low savings. Therefore, it could be assumed that without insurance premium
the property value that could be bought by the client is at $428,275. On the other hand, the
property value with the insurance premium can rise to the levels of $800,000.
Question 5: (Answer)
Yea
r
Property
price
Savings
Target
5%
upfront
Insurance
premium
Stamp
duty Amount
0
$
977,500
$
85,933
$
48,875
$
37,532
$
41,868
$
(42,342)
1
$
1,034,121
$
123,625
$
51,706
$
39,706
$
41,765
$
(9,551)
2
$
1,094,022
$
163,167
$
54,701
$
42,006
$
44,184
$
22,276
3
$
1,157,392
$
204,469
$
57,870
$
44,439
$
46,743
$
55,418
4
$
1,224,433
$
247,635
$
61,222
$
47,013
$
49,451
$
89,949
5
$
1,295,357
$
292,758
$
64,768
$
49,736
$
52,315
$
125,938
6
$
1,370,390
$
339,939
$
68,520
$
52,617
$
55,346
$
163,457
7
$
1,449,769
$
389,284
$
72,488
$
55,665
$
58,551
$
202,579
8
$
1,533,746
$
440,903
$
76,687
$
58,890
$
61,943
$
243,383
9
$
1,622,587
$
494,910
$
81,129
$
62,301
$
65,531
$
285,949
10
$
1,716,574
$
551,427
$
85,829
$
65,909
$
69,327
$
330,362
Yea
r
Property
price
Savings
Target 20% upfront
Stamp
duty Difference

BUSINESS FINANCE
5
0
$
977,500
$
85,933
$
195,500
$
41,868
$
(151,435)
1
$
1,034,121
$
123,625
$
206,824
$
41,765
$
(124,963)
2
$
1,094,022
$
163,167
$
218,804
$
44,184
$
(99,822)
3
$
1,157,392
$
204,469
$
231,478
$
46,743
$
(73,752)
4
$
1,224,433
$
247,635
$
244,887
$
49,451
$
(46,703)
5
$
1,295,357
$
292,758
$
259,071
$
52,315
$
(18,629)
6
$
1,370,390
$
339,939
$
274,078
$
55,346
$
10,516
7
$
1,449,769
$
389,284
$
289,954
$
58,551
$
40,779
8
$
1,533,746
$
440,903
$
306,749
$
61,943
$
72,211
9
$
1,622,587
$
494,910
$
324,517
$
65,531
$
104,862
10
$
1,716,574
$
551,427
$
343,315
$
69,327
$
138,785
11
$
1,816,005
$
610,579
$
363,201
$
73,342
$
174,036
12
$
1,921,196
$
672,500
$
384,239
$
77,591
$
210,670
13
$
2,032,480
$
737,328
$
406,496
$
82,085
$
248,747
14
$
2,150,210
$
805,207
$
430,042
$
86,840
$
288,325
15
$
2,274,759
$
876,289
$
454,952
$
91,870
$
329,467
16
$
2,406,523
$
950,734
$
481,305
$
97,192
$
372,238
17
$
2,545,919
$
1,028,707
$
509,184
$
102,821
$
416,702
18
$
2,693,389
$
1,110,383
$
538,678
$
108,777
$
462,928
19
$
2,849,402
$
1,195,944
$
569,880
$
115,078
$
510,986
20
$
3,014,451
$
1,285,580
$
602,890
$
121,744
$
560,946
From the evaluation of above table, it could be identified that within upfront payment
of 20% of the client could effectively by the house during sixth year office savings.

BUSINESS FINANCE
6
However, the use of orphan payment of 5% would eventually allow the client to buy the
house in 2nd year of her being employed in Sydney.
Question 6: (Answer)
Property value 1,094,022$
Loan amount 1,039,321$
Year Interest rate Mortgage PaymentSaved Savings
3 3.39% $35,233 74,511$ 39,278$
4 3.39% $35,233 93,632$ $58,399
5 3.39% $35,233 114,973$ $79,740
6 7.00% $72,752 138,640$ $65,888
After evaluating the mortgage payment condition of the client that could be identified
that, any increment in interest rates from 3.39% to 7% would not affect how capability to
support the mortgage payments. This is relatively detected from the above calculations
conducted in the table, where the savings are adequate to support her increased mortgage
payments.
Question 7: (Answer)
The overall financial plan drafted for the client could eventually backfire during an
economic crisis, where the actual income of the client would get hampered. The financial
planning is laid on the income stream of the client, where the property can be bought only if
the income stream continues. In addition, the changes in the constant income would directly
nullify the condition of buying a house in Sydney (Fitzpatrick & Pawson, 2014).

BUSINESS FINANCE
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Reference and Bibliography:
Abs.gov.au. (2018). Ato.gov.au. Retrieved 26 May 2018, from
https://www.ato.gov.au/calculators-and-tools/simple-tax-calculator/
Fitzpatrick, S., & Pawson, H. (2014). Ending security of tenure for social renters:
Transitioning to ‘ambulance service’social housing?. Housing Studies, 29(5), 597-
615.
Hulse, K., & Milligan, V. (2014). Secure occupancy: A new framework for analysing
security in rental housing. Housing Studies, 29(5), 638-656.
Hulse, K., Pawson, H., Reynolds, M., & Herath, S. (2014). Disadvantaged places in urban
Australia: analysing socio-economic diversity and housing market performance.
Lee, C. L., & Reed, R. G. (2014). The relationship between housing market intervention for
first-time buyers and house price volatility. Housing studies, 29(8), 1073-1095.
Stampduty.calculatorsaustralia.com.au. (2014). Stamp Duty Calculator. Retrieved 26 May
2018, from https://stampduty.calculatorsaustralia.com.au/