Question
As an experienced financial adviser you are often asked to provide assistance to people who are contemplating to make investment decisions but are entangled with
As an experienced financial adviser you are often asked to provide assistance to people who are contemplating to make investment decisions but are entangled with their personal finances. One of your clients, Mr. Robin Hood, is seeking to purchase a motor vehicle for approximately $10,000 and requires finance in order to complete the purchase. He has recently visited the following financiers who have each approved finance for an amount of $10,000 on the following terms and conditions: - BSP: 3 year loan with end of month repayments of $350 and a loan establishment fee of $100 payable upon loan acceptance; - ANZ: 2 year loan with end of month repayments of $500; and - HFC: 3 year loan with end of quarter repayments of $1,050 and a loan establishment fee of $150 payable upon loan acceptance. Robin is now confused as to which finance alternative is best given the different terms and conditions of each financier, and therefore seeks your assistance and advice. Seeing all the different figures, he is now in a dilemma whether he would be able to afford the vehicle or not. a. Prepare a one-page questionnaire to gather more information from your client, Mr. Hood, on his current financial status. b. Identify all the potential risks that Mr. Hood could face with his investment. c. Assist Robin on what financial basis should he seek to differentiate and select between the different financiers? Support your answers with relevant calculations. d. Prepare a detailed (not more than one page) recommendation to Robin based on your calculations from (c) above to advice on the preferred finance alternative.
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