:clearly work out.

Question.

Today is 1 August 2018. Jimmy is 30 years old today and he is considering purchasing 5,000 units of XYZ shares today (XYZ's current share price is $20). Jimmy will use his own savings to cover 20% of the purchase cost and he is planning to borrow the remaining 80% of the purchase cost using a 5-year personal loan from MQU Bank. Jimmy now has two loan package to choose between

? Package 1.

- Jimmy will make 60 monthly repayments at the beginning of each month over the following five years with the first payment being made today. This loan needs to be fully repaid by the end of 5 years .

- This package has an annual fee of $200. The package fee is paid on 1 August of each year during the following five years period . The first one being paid today. - The interest rate of this package is j12 = 10% p.a.

? Package 2.

- Jimmy will make 60 monthly repayments at the beginning of each month over the following five years with the first payment being made today. This loan needs to be fully repaid by the end of 5 years

- Jimmy can have a one year interest-only-period at the beginning of the mortgage. Jimmy's repayments will be interest-only1 for the first year , followed by payments of principal plus interest for the following 4 years.

- This package has an annual fee of $400. The package fee is paid on 1 August of each year during the following five year period .The first one being paid today.

- The interest rate of this package is j12 = 12% p.a. Jimmy also plans to sell all the XYZ shares in 5 years' time (on 1 August 2023). He predicts that the XYZ share price will grow at a rate of y% p.a.

Jimmy assumes that

y = the Australian 10-year Government Bond Yield for 2017 + 10%. (For example, if the XYZ share price is 30 on 1 August 2018 and y is assumed be 15%, the XYZ share price will be 30 from 1 August 2018 to 31 July 2019 and will be 30 (1 + 15%) from 1 August 2019 to 31 July 2020.) The Australian 10-year Government Bond Yield for 2017 is 2.63.

Jimmy assumes that XYZ shares will pay a dividend on 1 January and 1 July of each year. Jimmy predicts that there are two potential outcomes for the dividend amount.

? Outcome 1: the dividend amount is assumed to be $1 on 1 January 2019 and will increase at a rate of 5% per half-year.

? Outcome 2: the dividend amount is assumed to be $3 on 1 January 2019 and will increase at a rate of 2% per half-year.

NB: Interest-only repayment means your repayments only cover the interest on the amount you have borrowed, during the interest-only period. For example, if you borrow $1,000 through a fiveyear mortgage on 1 July 2018 with a one year interest-only period at j12 = 6% during the first year , your monthly repayment is $1, 0006%/12 = $5 per month. On 1 July 2019, you need to use the remaining four years to repay the borrowed $1,000. The present value on 1 July 2019 of all payments in the remaining four years should be equal to $1,000.

SHOW EACH STEP AND ALL WORKING ON EXCEL:

a.)

- Calculate the loan repayment amount for each month of package 1 and package 2.

- Use Goal Seek to find the net borrowing cost for package 1 and package 2 by including the annual fee

- Use a bar or column chart to compare the loan repayment amount of package 1 and package 2 over the five-year loan period.

b)

- Calculate the share price on 1 August 2023.

- Calculate the accumulated dividend value for outcomes 1 and 2. Assume a reinvestment rate of 0.5% per month.

- Calculate the holding period rate for outcome 1 and 2. You can consider that the initial investment cost is $100,000 and the interest payment of this investment is the dividend payments. Express your answer as an annual rate of compound interest.

c. The cash outflow of this investment has been analysed in part a and the cash outflow of this investment has been analysed in part b.

It is noticed that there are four potential outcomes for Jimmy:

loan package 1 with dividend outcome 1,

loan package 1 with dividend outcome 2,

loan package 2 with dividend outcome 1 and loan package 2 with dividend outcome 2.

- Find the net cash flow in each month from August 2018 to July August 2023 for these four potential outcomes.

- Calculate the present value of the net cash flow for these four potential outcomes. Assume that we use 5% p.a. to find the present value.

- Use a bar or column chart to compare the present value of net cash flows for the four potential outcomes.

The effectiveness of a tablet containing x mg of drug 1 and x2 mg of drug 2 was being tested. In trials the following results were obtained: % effectiveness, y 92.5 50.9 20.8 94.9 54.1 16.9 89.3 47.3 25.2 94.1 45.1 49.7 98.9 37.6 95.2 Ey= 469.7 Ex, =235 x2 = 207.8 x =11,202.68 x2 = 12,886.42 [ xx1 = 22,028.78 _ xx2 = 19,870.22 [ 12 =8,985.96 (i) Using the multiple linear least square regression model: y = a + Bix + B2xzte (a) Show that the least squares estimates of or, , and B, satisfy: [ vi = na + B, Exil + BZ Z x12 (b) Hence, using the above data, find their numerical values. [7] (ii) Predict the percentage effectiveness for a tablet containing 51.3 mg of drug x and 18.3 mg of drug x2. [2] [Total 9]Three insurance companies, A, B and C, write the same class of insurance business in each of four separate regions I, II, III, and IV. The table below shows their mean claim amounts, y , in 1998, per f100 sum insured. Region A B C Total I 89 68 62 219 II 78 59 61 198 III 114 85 83 282 IV 79 61 82 222 Total 360 273 288 921 [ y2 = 73,471 (i) Ignoring possible regional effects, carry out a one-way analysis of variance to establish whether the data provide evidence of differences in mean claim amounts between companies. [5] (ii) Obtain a 95% confidence interval for the true mean claim amount (per f100 sum assured) of Company B. [3] [Total 8]Same situation as In Question 1, but now calculate the estimated Intercept: ll A real estate salesperson is Interested in the relationship between sale price of a house and the size of the house as measured In square feet A sample of four houses Is as follows: Sale prices Square footage We want to calculate the least squares regression line y = El] + lm, where y is sale price and at is square footage of the house. Using the formulas I gave in class, calculate '3'} and enter the numerical 1ruralue below