Investment Planning 1 AS3002

squeak043 · 20-09-2011, 05:12 PM

Having a wee bit of trouble finding the formula to calculate the purchase price of a 10 year government bond parcel as requested in question 2b.

Can anyone help?

Hector · 20-09-2011, 11:32 PM

Hi,

this is what I got

Purchase price of 10 yr Bond
PP = C1 / 1 + I, + C2 / (1 + I)2, + C3 / (1 + I)3, + C4 / (1 + I)4, + C5 / (1 + I)5, + C6 + FV / (1 + I)6
= 3.475 / 1.036 + 3.475 / 1.073 + 3.475 / 1.112 + 3.475 / 1.152 + 3.475 / 1.193 + 3.475 + 100 / 1.236
= 3.354 + 3.329 + 3.125 + 3.016 + 2.913 + 83.718
= 99.365

Tia · 21-09-2011, 12:11 PM

Q3 a) iii What did you get for the IRR? do we need to include the sale of the property?

Please help..

Hector · 21-09-2011, 11:36 PM

I really struggled with the IRR, but htis is how I did it which seems the opposite of what the notes tell you to do

iii) IRR = $480,000 = 20665 / (1 + I) + 21307 / (1 + I)2 + 21862 / (1 + I)3 + 575,000 / (1 + I)3
10.37% = 20665 / 1.1037 + 21307 / 1.218 + 21862 / 1.344 + 575000 / 1.344
= 18723.38 + 17491.22 + 16260.60 + 427675.84
= $480,151.04 Rounded up to 10.4%

It was marked as correct but I still don't really get it

regards

Tia · 22-09-2011, 11:41 AM

Hey thanks for your help.i got 10.38%

squeak043 · 27-09-2011, 10:19 AM

Quote:

Originally Posted by Hector

Hi,

this is what I got

Purchase price of 10 yr Bond
PP = C1 / 1 + I, + C2 / (1 + I)2, + C3 / (1 + I)3, + C4 / (1 + I)4, + C5 / (1 + I)5, + C6 + FV / (1 + I)6
= 3.475 / 1.036 + 3.475 / 1.073 + 3.475 / 1.112 + 3.475 / 1.152 + 3.475 / 1.193 + 3.475 + 100 / 1.236
= 3.354 + 3.329 + 3.125 + 3.016 + 2.913 + 83.718
= 99.365

Where did you source this formula from? I cant find it in the subject notes!!

squeak043 · 27-09-2011, 10:50 AM

Never mind! Found it, I was looking all through the calculation section... For anyone who is curious its on page 4:34

Hector · 27-09-2011, 12:09 PM

Yep, that is exactly what I was about to reply. cheers

Petrai · 19-10-2011, 09:35 PM

Can anyone assit with what they are looking for in Q5 regarding Grace? Happy to assist with other questions? Petrai

cammmm · 26-10-2011, 03:23 PM

Hi. Have you guys handed in IP1 yet? what was the feedback? I think I have the gist of most of it but mostly worried about Q5. How did you go about layout etc and structuring your answers? Im doing IP1 AS3002, the case study is on Isabella. Keen to hear how you got on or any help on offer?
Cheers