Gordon has a goal of purchasing a new second hand car valued at approximately $14,000 financed from the returns generated on his investments over
Gordon has a goal of purchasing a new second hand car valued at approximately $14,000 financed from the returns generated on his investments over the next 12 months. He currently has approximately $150,000 available for investment and wishes to select any one of the following alternative investments in order to realise his goal: Expected Income return (% p.a.) Details 1 year unsecured bank note 10 1 bedroom rental property 4 Shares in Australian bank 3 Expected Capital return (% p.a.) 0 8 12 Ignore the effects of taxation in your calculations. (a) Calculate the expected amount of income and capital generated by each investment over the next 12 months. (4 marks) (b) Rank the investments in the order of their total return (expressed as a dollar amount) from the highest to the lowest. (4 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
a To calculate the expected amount of income and capital generated by each investment over the next ...See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
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