Spreadsheet Modeling for Decision Making Q$2$ & Q$3$Question $2(10$ marks$)$

You are choosing between two properties to invest in$.$

Property A $-$ The purchase price of the property is $$1,000,000.$ The down payment

is $20\%$ and the rest would be covered by a $30-$year mortgage loan at a Loan Rate of

$5\%.$ You will rent out the property at a monthly rent of $$3,000.$ At the end of $10$

years, you would sell the property and the expected selling price is $$1,500,000.$

Property B $-$ The purchase price of the property is $$1,500,000.$ The down payment

is $30\%$ and the rest would be covered by a $30-$year mortgage loan at a Loan Rate of

$6\%.$ You will rent out the property at a monthly rent of $$4,500.$ At the end of $10$

years, you would sell the property and the expected selling price is $$2,200,000.$

Create two models to compare the two property investments by calculating:

a$)$ The monthly payment amount for the loan

b$)$ The Net Present Value of all the cashflows for each property investment over the

$10-$year period, assuming an annual $7\%$ discount rate.

c$)$ Which one is a better investment?

d$)$ At what discount rate would there be no difference between the two property

investments?

Question $3(10$ marks$)$

Internet Shopping, Inc. has ambitious plans. This week they have $100,000$ visitors

to their website. Of their visitors, $2\%$ place orders. These orders average $$24\mathrm{.}00$

each. Thus, they are taking orders for $$48,000$ this week $($week $0).$

For the next two years they plan to increase the visitors by $3\%$ per week. They

expect the percent who place orders to stay the same. They expect the average

amount order to increase by $$0\mathrm{.}15$ per week.

Create a worksheet to predict their growth over the next two years. You should

have a separate input area with the two growth figures. You should have a row for

each week. You should have columns for the week number $(0$ to $104),$ the number

of visitors, number of shoppers, average amount ordered, and total ordered for each

week. Changing either of the numbers in the input area should be reflected in

changes in your worksheet.

Calculate the total order for the entire two years.

The company wants to set the total order to $$60,000,000$ for the entire two years.

What should be the growth rate of visitors per week to achieve this, assuming other

inputs or parameters remain the same.