Finance Assignment: Investment Analysis and Valuation

This finance assignment provides a comprehensive analysis of various financial concepts. It begins with calculating quarterly investments needed to reach a future savings goal, considering compound interest. The assignment then delves into investment appraisal, calculating the Net Present Value (NPV) of a recycling technology investment under different rates of return. Furthermore, the assignment explores personal financial planning, determining the future value of managed funds and superannuation. It includes calculations for portfolio beta and risk assessment, comparing the risk of a portfolio to the market. Finally, the assignment analyzes the performance of Qantas stock, calculating its expected rate of return and standard deviation, and comparing its risk profile to the overall market risk.

Running head: ACCOUNTING AND FINANCE
Accounting and Finance
Name of the Student:
Name of the University:
Authors Note:

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ACCOUNTING AND FINANCE
Contents
Answer 1:.........................................................................................................................................2
Part a:...........................................................................................................................................2
Part b:...........................................................................................................................................4
Part c:...........................................................................................................................................6
Answer 2:.......................................................................................................................................12
Answer 3:.......................................................................................................................................13
Part a:.........................................................................................................................................13
Part b:.........................................................................................................................................13
Answer 4:.......................................................................................................................................14
Answer 5:.......................................................................................................................................20
References:....................................................................................................................................24

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ACCOUNTING AND FINANCE
Answer 1:
Part a:
The amount to be invested in the fund quarterly is $2,623.29 and the total amount of principal in
the fund at the end of the 6 year would be $62,958.95 thus, the total amount of interest that the
fund will earn is $27,041.05. The calculation is shown in detail below.
The amount of interest @6% per annum compounded quarterly is calculated on each dollar
below.
Quarters Interest on $1 per quarter
1 0.015
2 0.015225
3 0.015453
4 0.015685
5 0.01592
6 0.016159
7 0.016402
8 0.016648
9 0.016897
10 0.017151

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ACCOUNTING AND FINANCE
11 0.017408
12 0.017669
13 0.017934
14 0.018203
15 0.018476
16 0.018753
17 0.019035
18 0.01932
19 0.01961
20 0.019904
21 0.020203
22 0.020506
23 0.020813
24 0.021126
Total interest earned on $1 over the period of 6 years 0.429503

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ACCOUNTING AND FINANCE
Thus, over a period of 6 years total accumulated balance in the fund should be $90,000, i.e.
principal and interest combined hence, it can be said that ($1+$0.429503) = $1.429503 is equal
to the accumulated expected balance in the fund after 6 years, i.e. $90,000. Hence, total amount
of principal to be invested in the fund is (90,000/ 1.429503) = $62,958.95. Thus, amount to be
invested in the fund quarterly is (62,958.95 / 24) = $2,623.29.
Part b:
Sub part i:
In order to appraise the feasibility of the investment proposal it is imperative to calculate the net
present value of the investment proposal. The table below shows the calculation of net present
value of the investment proposal (Cumming, Helge Haß & Schweizer, 2018).
End of year Cash flow p.a. PV
factor
@12%
pa.
Present value of cash flows
Year 0 (30,000,000.0
0)
1 (30,000,000.00)
Year 1 $6,000,000 0.892857 5,357,142.86
Year 2 $8,500,000 0.797194 6,776,147.96
Year 3 $9,500,000 0.71178 6,761,912.35
Year 4 $12,000,000 0.635518 7,626,216.94

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ACCOUNTING AND FINANCE
Year 5 $15,000,000 0.567427 8,511,402.84
Net present value of the project 5,032,822.95
Since, net present value of the investment proposal is positive at $5,032,822.95 hence, the
technology should be purchase as it is expected to be profitable for the investor.
Sub part ii:
In case the required rate of return is 14% per annum instead of 12% per annum then the net
present value of the investment proposal, i.e. the technology is calculated below.
End of year Cash flow p.a. PV
factor
@14%
pa.
Present value of cash flows
Year 0 (30,000,000.0
0)
1 (30,000,000.00)
Year 1 $6,000,000 0.877193 5,263,157.89
Year 2 $8,500,000 0.769468 6,540,473.99
Year 3 $9,500,000 0.674972 6,412,229.40
Year 4 $12,000,000 0.59208 7,104,963.33

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ACCOUNTING AND FINANCE
Year 5 $15,000,000 0.519369 7,790,529.97
Net present value of the project 3,111,354.58
Since the NPV of the investment purchase proposal is positive with an NPV of $3,111,354.58
hence, the investment should be purchased even if the required rate of return is 14% per annum
instead of 12% per annum.
Part c:
Sub part i:
Value of Jane’ financial asset when Jane will be 67 years old is $3,145,309.42. The detailed
calculations of two financial assets, i.e. managed fund and superannuation fund are calculated
below.
Value of managed fund at the age of 67 years will be $487,048.05
Age Balance
managed fund
opening
balance
Interest
@6%
Closing
balance
37 80,00
0.00
4,800.
00
84,80
0.00
38 84,80 5,088. 89,88

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ACCOUNTING AND FINANCE
0.00 00 8.00
39 89,88
8.00
5,393.
28
95,28
1.28
40 95,28
1.28
5,716.
88
100,99
8.16
41 100,99
8.16
6,059.
89
107,05
8.05
42 107,05
8.05
6,423.
48
113,48
1.53
43 113,48
1.53
6,808.
89
120,29
0.42
44 120,29
0.42
7,217.
43
127,50
7.85
45 127,50
7.85
7,650.
47
135,15
8.32
46 135,15
8.32
8,109.
50
143,26
7.82
47 143,26
7.82
8,596.
07
151,86
3.88
48 151,86 9,111. 160,97

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ACCOUNTING AND FINANCE
3.88 83 5.72
49 160,97
5.72
9,658.
54
170,63
4.26
50 170,63
4.26
10,238.
06
180,87
2.32
51 180,87
2.32
10,852.
34
191,72
4.66
52 191,72
4.66
11,503.
48
203,22
8.13
53 203,22
8.13
12,193.
69
215,42
1.82
54 215,42
1.82
12,925.
31
228,34
7.13
55 228,34
7.13
13,700.
83
242,04
7.96
56 242,04
7.96
14,522.
88
256,57
0.84
57 256,57
0.84
15,394.
25
271,96
5.09
58 271,96 16,317. 288,28

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ACCOUNTING AND FINANCE
5.09 91 2.99
59 288,28
2.99
17,296.
98
305,57
9.97
60 305,57
9.97
18,334.
80
323,91
4.77
61 323,91
4.77
19,434.
89
343,34
9.66
62 343,34
9.66
20,600.
98
363,95
0.64
63 363,95
0.64
21,837.
04
385,78
7.68
64 385,78
7.68
23,147.
26
408,93
4.94
65 408,93
4.94
24,536.
10
433,47
1.03
66 433,47
1.03
26,008.
26
459,47
9.29
67 459,47
9.29
27,568.
76
487,04
8.05

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ACCOUNTING AND FINANCE
The value of superannuation fund when Jane will be 67 years old is calculated below:
Age Balance managed fund
opening balance
Annual contribution Interest @7% Closing balance
37 85,000.00 18,000.00 7,210.00 110,210.00
38 110,210.00 18,000.00 8,974.70 137,184.70
39 137,184.70 18,000.00 10,862.93 166,047.63
40 166,047.63 18,000.00 12,883.33 196,930.96
41 196,930.96 18,000.00 15,045.17 229,976.13
42 229,976.13 18,000.00 17,358.33 265,334.46
43 265,334.46 18,000.00 19,833.41 303,167.87
44 303,167.87 18,000.00 22,481.75 343,649.62
45 343,649.62 18,000.00 25,315.47 386,965.10
46 386,965.10 18,000.00 28,347.56 433,312.65
47 433,312.65 18,000.00 31,591.89 482,904.54
48 482,904.54 18,000.00 35,063.32 535,967.86
49 535,967.86 18,000.00 38,777.75 592,745.61
50 592,745.61 18,000.00 42,752.19 653,497.80

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ACCOUNTING AND FINANCE
51 653,497.80 18,000.00 47,004.85 718,502.64
52 718,502.64 18,000.00 51,555.19 788,057.83
53 788,057.83 18,000.00 56,424.05 862,481.88
54 862,481.88 18,000.00 61,633.73 942,115.61
55 942,115.61 18,000.00 67,208.09 1,027,323.70
56 1,027,323.70 18,000.00 73,172.66 1,118,496.36
57 1,118,496.36 18,000.00 79,554.75 1,216,051.11
58 1,216,051.11 18,000.00 86,383.58 1,320,434.68
59 1,320,434.68 18,000.00 93,690.43 1,432,125.11
60 1,432,125.11 18,000.00 101,508.76 1,551,633.87
61 1,551,633.87 18,000.00 109,874.37 1,679,508.24
62 1,679,508.24 18,000.00 118,825.58 1,816,333.82
63 1,816,333.82 18,000.00 128,403.37 1,962,737.18
64 1,962,737.18 18,000.00 138,651.60 2,119,388.79
65 2,119,388.79 18,000.00 149,617.22 2,287,006.00
66 2,287,006.00 18,000.00 161,350.42 2,466,356.42
67 2,466,356.42 18,000.00 173,904.95 2,658,261.37