Case study:

You are working in an Accounting, Finance and Business Advisory company as an investment advisor. In this profession you are required to use numerous statistical data to advise your clients according to their individual circumstances and preferences.One of your clients (your trainer and assessor) wants to make an investment of $ 1,000,000. The options your client is considering to make the investment are as follow:

a.Making investment in Australian shares

b.Buying a caf for $1,000,000 that will have a turnover of $ 450,000 and net profit of $18%.

c.Buying a household goods retailing store- having turnover of $1.2 million and net profit of 10%.

d.Buying a departmental store having turnover $ 1.8 million and net profit 4%.

Before making investments, your client wants to find out the best option where he can invest his money to get maximum returns.

Consider the following scenarios:

Considering that the client's business will follow the industry trends from September 2017 for all the options, the statistical data are as follow:

Scenario 3: Buying a retail store for household goods (option c)

In current prices, the trend estimates for Household goods retailing fell 2% in 2017 and continue to fall by 2% in 2018 and then there will be a rise by 5% per year for next 3 years.

Task 3: Calculate, what will be the client's investment be worth in December 2022 for each investment option assuming cost of capital is 8%.