FINM1416 Workshop 2 Java

Java Python FINM1416 Workshop 2 Assignment

This assignment has 2 components: (1) An individual component (50%) to be completed individually on Blackboard, and (2) A group component (50%) to be completed in groups during and after your workshop.

Important:

You must complete your Individual Component to take part in the Group Workshop (there is no point in attending the workshop if you have nothing to bring to the workshop for discussion with your team members).

You must attend the workshop to receive a grade for the group component.

You are expected to work in the same group that you did in your previous workshop.

The individual component is due at 8:00AM on Monday of the workshop week. The group component will commence during the workshop where staff will be present to help ensure you are on the right track. It will be due at the same time one week after your workshop. Please refer to the Assessment tab on Blackboard for details of due dates.

After submitting your group component work, you are required to complete the Peer Assessment individually on Blackboard to evaluate the level of contributions in various aspects made by your group peers. The Peer Assessment implies that not everyone in the same group will have the same mark. The due date for the Peer Assessment is at the same time exactly one week after the due date of your group report.

Preparation

The purpose of this workshop assignment is to complete a Buy vs. Rent analysis. Make sure that you must have completed Modules 3 and 4, Tutorials 3 and 4, and Lecture 3 before attempting this assignment. Failing to do this will likely cause confusion and delay your progress in this assignment.

Problem

Amy has recently accepted a new job offer as a senior research scientist at UQ (St Lucia campus). She moved to Brisbane a few weeks ago and is now considering whether to rent or buy a property in some neighbourhood close to her work. After undertaking several property inspections and independent  research, Amy  has now found a feasible option that suits  her work schedule, lifestyle, and preferences.

1) Buying: A 2-bedroom unit in St Lucia built 10 years ago that takes about 15 minutes’ walk to UQ campus. Despite a strict body corporate requiring permission for pets or major alteration, the unit already has water saving devices installed and is eligible for rooftop solar panel installation – an option that Amy values greatly. If she buys this property, it will be her first home ever.

Property cost: $1,100,000 (Offers over $970,000, but she thinks she can get it for $1,100,000)

Other costs when buying the property: Legal fees ($1,500), deed transfer tax (@3% of property value), solar panels  installation ($6,500).

Ongoing costs: Repairs  and  maintenance  fees  (+$200/month), council fees (+$120/month), sewage and water (+50/month), body corporate fees (+$350/month). Estimated cost savings from rooftop solar panel is $150/month.

Selling in 10 years: Amy plans to sell the townhouse for $1,750,000 in 10 years. She also expects to pay off her mortgage at that time. She estimates that the selling fees she will have to pay to the real estate agent is 2.5% of the selling price.

Benefits: Within a short walking distance to UQ campus and close to Toowong shopping centre, easy access to public transport (UQ Lakes and Chancellor bus stops, Guyatt ferry station, etc.) to CBD and other suburbs, rooftop solar panels installation option.

Having worked for many years, she now has a substantial amount of savings that will allow her to make a deposit of 22% of the purchase price. She will pay any other initial expenses from her own pocket.

2) Renting. If she does not buy the house, she will continue to stay at a place she is temporarily renting now – a house in Kangaroo Point, which is very close to Brisbane CBD but further out from UQ campus. She would commute to UQ using public transport most of the days, costing her $1,200 a year. The rent is $1,300 per fortnight for this 2-bedroom house. The landlord has promised not to increase it until Amy leaves.

Interest rates.

Amy has found two local lenders in Brisbane:

Queensland Country Bank (https://www.queenslandcountry.bank/)

Westpac (https://www.westpac.com.au/ )

Assume that current rates will apply going forward and already have included any discount or benefit (if any).

Required:

Use a 30-year loan and 3-year st< FINM1416 Workshop 2 AssignmentJava /i>andard fixed rates to calculate monthly payments. Assume that rates are compounded monthly and Amy can save at the same rate as she can borrow.

In preparation for your assessment, make sure you evaluate the two buy or rent options for both banks. Also, think about how you would decide what option you would choose based on financial factors and what non-financial factors you would consider in your final decision.

Part 1 – Individual Component (due Monday September 2nd  at 8:00AM) (50% of mark)

Use the “Workshop 2 – Buy vs Rent Template” Excel spreadsheet on Blackboard and fill out all cells in yellow. Try to use as many formulas as possible. Guidance for certain cells is provided through comments in the Excel file.

When complete, fill out the Workshop 2 Individual Component (Quiz) on Blackboard. This is what you will be bringing to your workshop to start the discussion with your team members. It prompts you to answer the following questions:

Q1: What is the APR for Queensland Country Bank? For Westpac? You must provide the sources of where you found the rates (the exact link to the webpage where you got the rate) and the date when you retrieved the information).

Q2: What is the total monthly payment (property + bank) for the Buy option under the Queensland Country Bank loan? Under the Westpac loan?

Q3: What is the PV of the buy option with Queensland Country Bank? With Westpac? For the Rent option?

Q4: Upload your filled-out template to Blackboard. Here, also clearly state any assumptions made and why you made them for Q1-4.

Q5: List two non-financial criteria used in selecting a lender and two non-financial criteria when choosing between the Buy and Rent option. Explain the importance of the selected criteria (explanation on non-financial criteria is below) (maximum of 3 sentences on each).

See the marking rubric posted on Blackboard for a breakdown of marks.

Part 2 – Group component (2hr workshop + report due at the same time one week after your workshop) (50% of mark)

You are expected to work in the same group as you did in your previous workshop. You must attend the workshop to get marks for this component.

1) First ≈ 10 minutes :

Brief introduction to the workshop

Staff will walk around the room to each table to help you form. your groups and record group information on Blackboard.

2) Remaining workshop time: Review and discuss the different answers of your group members. Then, begin to brainstorm and write up the answers for your group report (up to 1,000 words in total):

a.     Rank the options using solely financial criteria. Make sure you explain both the theory behind your rankings and provide the necessary computations (attach the completed Excel file in a separate file)

b.    Where are they any differences in the answers to Q1-4? Where did they come from? How did you resolve them? (if there are no differences identified, list what was the most challenging about this exercise and why)

c.     What are the most important non-financial factors that are considered by members of your team, for both lender and Buy vs. Rent, and why? Outline any differences you encountered and whether views have been influenced by other team members.

d.    Describe which option each member would choose, explain which criteria was most important in the decision, and whether this has changed from their initial choice.

The non-financial criteria mentioned in the essay are to come from your general knowledge. The idea is to acknowledge that money is not the only factor in making this type of decision. We are looking for how you think about decision making. There is no single correct answer – anything that would impact your decision is fine provided you can reasonably argue that your selected criteria are relevant to the choice of a particular buy option or to rent, and it is non-financial.

See the marking rubric posted on Blackboard for a breakdown of marks.

Marking

Your final score for the workshop will be computed out of 100 marks. Your best three workshops will count toward your final workshop grade (each worth 15%)