This report contains a financial analysis of the monthly income. The way that it will be invested on accommodation buying and then the rest of the money on shares.All the calculations has been done by using the financial theories that we learned in class. The details of the house is researched thru an online real-estate website that is based in Australia and the house is decided according to the income earned. The stamp duty and relevant charges is calculated thru an Australian financial website. The shares investment is selected from yahoo finance website and 10% income after loan payment is allocated.
SECTION AHouse PurchaseIncome ArrangementsMy Pretend annual income after tax – $ 110.000Monthly after tax income – (110,000/12) = $9166.67Maximum Repayment allowed – 50% of after tax incomeMonthly Reserve – ( 50% * 9166.67) = $4,583[Monthly Payment should not exceed 50% of monthly after tax income] About the HouseThe house is located in Queensland Australia.25/15 Pine Avenue Beenleigh is the address and the price of the house would be $169,000
Down PaymentFinancial Institute required me to pay a deposit of 10% of the value of the property
10%* $169,000= $16,900.00Duty and ChargersThe amount due after the deposit of 10% = (169,000 – 16,900) = $152,100 Stamp Duty in Queensland = $3,740Mortgage Registration = $132.5Land Transfer = $ 132.5Total = $4,005
Name – Bank of QueenslandInterest Rate – 6.17%
Loan RepaymentFormulaPV= PMT [1-(1+i)-n]MonthlyCalculationn = 360I = 6.17/12 = 0.514%Present Value (PV) = $156,105.00PV= PMT [1-(1+i)-n]156,105.00= PMT [ 1 – (1-0.5147%)-360]0.514%PMT=$9.53.06
FortnightlyCalculationn = 30 * 26 = 780I = 6.17/26 = 0.23%Present Value (PV) = $156,105.00PV= PMT [1-(1+i)-n]$156,105.00= PMT [ 1 – (1-0.23%)-780]0.23%PMT=$439.66
Remaining Income from the 30% of monthly after tax incomeMonthly after tax income – $9166.67Loan Repayment – $953.06Remaining Balance – ($9166.67-953.06) = $10,119.72 20% of remaining balance – $10,119.72*20% = $2,023.94 Therefore I’m buying shares from my remaining income of $2,023.94
The Companies for Investment
Wal-Mart Stores, Inc., branded as Walmart, is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores.
BlueScope Steel is a flat product steel producer with operations in Australia, Asia, New Zealand, North America and Pacific Islands. It was demerged from BHP Billiton on 22 July 2002 as BHP Steel and renamed BlueScope Steel on 17 November 2003. Portfolio 1
Total shares accumulated =393Total value of the Portfolio on 31st July 201228431.49Future value28431.49Present Value27172.68Holding Return = Wealth/Initial Price * 100% = (FV-PV)/Initial Price * 100%4.63263101Nominal =56.3636773
Total shares accumulated =4564Total value of the Portfolio on 31st July 201222484.19Future value22484.19Present Value19553.29Holding Return = Wealth/Initial Price * 100% = (FV-PV)/Initial Price * 100%14.98929336Nominal =182.3697359
Total shares accumulated =196Total value of the Portfolio on 31st July 201214177.01Future value14177.01Present Value13549.32Holding Return = Wealth/Initial Price * 100% = (FV-PV)/Initial Price * 100%4.63263101Nominal =56.36367729
BlueScope Steel Limited (BSL.AX)
Total shares accumulated =1991Total value of the Portfolio on 31st July 20129805.62Future value9805.62Present Value8527.42Holding Return = Wealth/Initial Price * 100% = (FV-PV)/Initial Price * 100%14.98929336Nominal =182.3697359
What is a Dividend?When you buy a share of a company, you become an owner of that company. You are entitled to share the profit the company makes every year—you shared in the risk, and you share in the reward. Some companies pay dividends. A dividend is a portion of the profit the company makes paid to each shareholder. For example, if Acme Lemonade Stands makes a million dollars in profit and has a million shares, the company could pay a dollar per share as a dividend. Why Do Some Companies Not Pay Dividends?
A company may not pay a dividend if its directors believe that it’s better to put the business’s profits to work making the business itself more valuable. Warren Buffett’s Berkshire Hathaway is a famous example of this; the company has grown through acquiring other good businesses, mostly in the US and Canada, many of which themselves pay dividends. If Buffet and his partner Charlie Munger ever felt that the best use of the company’s profits were to return it to shareholders, Berkshire Hathaway would pay a dividend.
An established business with a dominance in the market and few opportunities to grow doesn’t always have this luxury. In that case, the value of the stock depends on being able to pay a good and steady dividend. In other cases, the value of the stock depends on the company growing larger and making steadily more money. These growth stocks often do not pay dividends. Beware of one case: some companies facing difficult times might raise their dividend payouts to appear more attractive. Always check to see what the real cash flow situation is before you chase down the highest dividends.
As we tried to get dividends payment on both the companies on yahoo finance it looked they have not paid dividends on the financial year we choose. Their for we were unable to calculate dividends. Conclusion
In conclusion the Walmart Company Provided the greater Return, when investing risk would be minimum rather investing in 1 share. When investing on two share it reduces the risk as if one company breaks down the other will keep and save up money.
Home loan interest rates – new loans only. (n.d.). Retrieved from BOQ: http://www.stampdutycalculator.com.au/stamp-duty-qld Realestate. (n.d.). Retrieved from Houses: http://www.realestate.com.au/property-townhouse-qld-beenleigh-114579239 Stamp Duty Calculator. (n.d.). Retrieved from http://www.stampdutycalculator.com.au/stamp-duty-qld