Accounting and Finance Assignment: Retirement and Investment Analysis

This finance assignment delves into retirement planning and investment analysis, evaluating financial assets and superannuation. It calculates the future value of investments, determines monthly retirement amounts, and defines investment risk. The assignment also explores the Australian dividend imputation system and assesses the risk levels of BHP stock based on its beta. The analysis provides insights into financial planning, investment strategies, and risk management, including calculations for portfolio returns, superannuation contributions, and the impact of dividend imputation on investment returns. The document offers a comprehensive overview of financial concepts and their practical application in retirement planning and investment decisions.

Running head: ACCOUNTING AND FINANCE
Accounting and Finance
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1ACCOUNTING AND FINANCE
Table of Contents
i) Identifying the value of financial assets at the age of 60:............................................................2
cii) Detecting the total monthly retirement amount that will be provided to Gaye:........................3
i) Defining risk in terms of investment:...........................................................................................3
ii) Utilization for Australian dividend imputation credit system for Australian and international
investors:..........................................................................................................................................4
xii) Risk levels of BHP:...................................................................................................................4
References:......................................................................................................................................5

2ACCOUNTING AND FINANCE
i) Identifying the value of financial assets at the age of 60:
Particulars Value
Diversified share portfolio $ 125,000
Portfolio return 6.00%
Retirement age 60.00
Current age 45.00
Time left 15.00
Future value of investment 125,000*((1+6%)^15)
Future value of investment $ 299,569.77
Particulars Value
Superannuation account $ 750,000
Contribution $ 1,000
Superannuation return 8.00%
r 0.67%
Retirement age 60.00
Current age 45.00
Time left 15.00
y 180.00
Future value of
superannuation FV(0.67%,15,-1000,-750000)
Future value of
superannuation $2,826,229.33
Particulars Value
Future value of investment (A) $299,569.77
Future value of superannuation (B) $2,826,229.33
Value of Gaye’s financial assets
(A+B) $3,125,799.10
The above calculation has directly evaluated the current superannuation fund and
diversified portfolio value at the end of 60 years. The calculation has indicated that at retirement
age Gaye would have financial assets worth $3,125,799.10 in his portfolio.

3ACCOUNTING AND FINANCE
cii) Detecting the total monthly retirement amount that will be provided to Gaye:
Particulars Value
Value of Gaye’s financial assets $ 3,125,799.10
Age 90.00
Retirement age 60.00
T 30.00
t 360
Amount maintained $ 100,000
Interest compounded monthly 3%
r 0.25%
Monthly pension amount of Gaye PMT(0.25%,360,-3,125,799.10,100,000,0)
Monthly pension amount of Gaye $13,006.89
The above calculation directly utilizes the financial assets value of $3,125,799.10 for
detecting the monthly pension amount that would be provided to Gaye after the retirement at the
age of 60 until he turns 90 years of age. The restriction of the investment is that $100,000 needs
to be maintained at all time (Mees & Smith, 2019). Hence, the calculation detects that the
monthly pension amount go Gaye will the be at the levels of $13,00.89.
i) Defining risk in terms of investment:
Risk is be considered bad or an opportunity as per the perception of an investors, as risk
evaluates the probability of loss and expected returns from an investment. Risk is a overall
probability of the losses, which can be incurred from an investment, due to the volatility that is
currently being influenced by the capital market. The calculation of CAPM directly helps in
detecting the accurate level of expected return that needs to be provided by the stock in
accordance with the beta levels. Wu & Chiang (2019) stated that risk is one of the major
components that is used by the investors, while making relevant investment decisions.

4ACCOUNTING AND FINANCE
ii) Utilization for Australian dividend imputation credit system for Australian and
international investors:
The Australian dividend imputation system is considered to be one of the major
components that is motivating the investors to increase their exposure in the capital market. The
dividend imputation system is only based on the Australian taxation system and benefits only the
Australian residents. The tax credit cannot be used or enjoyed by the international investors due
the absence of imputation method (Elyasiani, Jia, & Movaghari, 2019). This mainly helps in
detecting the level of income that could be generated from an investment over the period of time.
The dividend imputations system mainly discards the double taxation ruling, which is conducted
by majority of the companies around the world. Thus, the tax credit on the dividends that is
received by the Australian investor will increase the actual returns from investment.
xii) Risk levels of BHP:
The beta levels of BHP are at 1.12, which is higher than the market risk levels. The
current value of 1.12 beta directly indicates that the risk attributes of the stock is relevantly high,
where any fluctuations in the capital market will directly raise the fluctuations in the prices of
BHP. In addition, the high beta level also indicates that the expected returns of the stock would
also be higher, as investors are incurring high risk to hold the stock (Song, Park & Lee, 2019).

5ACCOUNTING AND FINANCE
References:
Elyasiani, E., Jia, J., & Movaghari, H. (2019). Determinants of dividend payout and dividend
propensity in an emerging market, Iran: an application of the LASSO. Applied
Economics, 1-21.
Mees, B., & Smith, S. A. (2019). Corporate governance reform in Australia: a new institutional
approach. British Journal of Management, 30(1), 75-89.
Song, S., Park, S., & Lee, S. (2019). Does franchising reduce geographically diversified
restaurant firms’ risk?. International Journal of Contemporary Hospitality
Management, 31(1), 161-179.
Wu, C. H., & Chiang, H. E. (2019). Impact of Diversified Mergers and Acquisitions on
Corporate Risk. Journal of Economics, 15(1), 93-115.