Calculations of Present Cash Flow

In case of 6% rate of return, the investment of Scotty would be $ 31,635.33. the calculations of the investment is as follows:

Calculation of present cash flow
	Interest rate=	6%
Year Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Cash Flows	Present value factor	Present cash flow
1	$            3,000	0.943	$         3,180.000
2	$            6,500	0.890	$         7,303.400
3	$               280	0.840	$            333.484
4	$            1,400	0.792	$         1,767.468
5	$            3,000	0.747	$         4,014.677
6	$                 –	0.705	$                     –
7	$          10,000	0.665	$       15,036.303
Present cash flow		$       31,635.332

If the Jarrad Waite take the home loan than the total monthly repayment amount for 30 years would be $ 6992.79.

Loan amount	1800000
Term (annual)	360
Interest rate	5%
annual nominal rate	0.004166667
EMI	$9,662.79

According to Ben’s will, the total investment amount after the 65^thbirthday would be $3,235,410.98.

Calculation of total value at the age of 65
		Term	Interest rate	Value at the age of 65
Deposit amount annual	1500	420	7%	$2,701,581.90
Single deposit amount	50000	35	7%	$533,829.07
Total value at the age of 65	$3,235,410.98

After the retirement, Ben wish to get pension amount as well as he want to get $ 2,00,00 at the age of 90 years. So the pension amount would be $ $225,369.87.

After the age of 65, invetsor wish to get annual pension as well $ 2,00,000 at the age of 90. so,

The present value of $ 2,00,000	$59,060.55
The balance amount = 32,325,411 – $ 56,061 =	$3,176,350.42
Calculation of annual pension for 25 years
Present value	$3,176,350.42
Term	25
Interest rate	5%
Pension amt	$225,369.87

Question 2:

Part a:

%	Year 1 to 4 = 4.5%	Year 5-6= 6%	Year 7-10 = 7%
CFi		2500		2500		2700	-1500			7000	10000
Year
	1	2	3	4	5	6	7	8	9	10

%	Year 1 to 4 = 4.5%	Year 5-6= 6%	Year 7-10 = 7%
CFi		2500		2500		2700	-1500			7000	10000
Year
	1	2	3	4	5	6	7	8	9	10
P.V. of cash flow	2392.34	0	2190.74	0	2017.6	-1057.44	0	0	3807.54	5083.49
Accumulated value	$ 4583.09	$ 960.15	$ 8891.03
Total value	$ 14,434.27

Taxation amount  is the mandatory financial charge which is levied by the government upon the individuals and the corporate in order to fund various expenditures and manage the economical performance of the business. The conversation (2018) explains that Australian government charges 30% from the corporate against their profit. It has been argued by AFR (2018) that the Australian government charges higher taxation than various other countries. In the list of corporate tax rates, it has been measured that the Australian taxation rate is on 5^th number. It explains that the Australian government’s taxation rate is higher and it must be reduced by the Australian government in order to improve the economical performance of the business.

However, the News (2018) has argued that the Australian government offer the franking dividend to the shareholders of the company which basically manages the taxation rate of the country. The overall tax charges of the business reduce due to it. thus, it has concluded by them that the taxation rate of Australia is quite perfect and Australian government does not require to make any change into it (Saad, 2014). The changes into the Australian corporate taxation rate would lead to the business towards loss.  

It has been stated by The Australian (2018) into his report that the taxation rate of the Australian government is competitive in terms of economical performance as the company needs huge fund to manage the position as well as franking dividend policy offers a good market to FDIs. On the basis of the “The Conversation (2018)” article and the argument of various economist, it has been concluded that the Australian taxation rate is quite better and the country is not required to make any change into the policy. The changes into the Australian taxation rate would lead to the business towards less revenue which would impact on the economical position of the business.

The Australian corporate taxation policy has been set in such a way that the shareholders of the country don’t have to bear the burden of higher taxation. The total deducted tax amount is given back to the shareholders which makes the corporate system more impressive and due to which the FDIs feel attracted. However, there are various other factors as well which is considered by the FDIs before entering into the market to measure the overall position of the business (Henry, Harmer, Piggott, Ridout & Smith, 2009).

The Australian dividend imputation system explains that all the tax payers of the Australia which are either imputed or attributed, to the shareholder by a path of tax credit to make the reduction in the total distribution of income tax payable. The imputation system of the Australian government effectively charges the tax amount on the company’s profit at the average tax rates of the shareholders.

On the basis of the “The Conversation (2018)” article and the argument of various economist, it has been concluded that the Australian taxation rate is enough competitive in order to manage the economic performance of the business. Further, it is recommended that the Australian government is not required to make any change into the policy. The changes into the Australian taxation rate would lead to the business towards less revenue which would impact on the economical position of the business. Lastly, it has been measured that the corporate taxation structure of the Australian government is efficient which manages the tax payment and income tax payable of the business. 

Calculation of monthly return
	Stock price	Return
Date	WOW	WES	MKT	WOW	WES	MKT
31/08/2017	25.21	41.33	5744.9
30/09/2017	25.88	41.8	5976.4	2.66%	1.14%	4.03%
31/10/2017	26.91	43.92	6057.2	3.98%	5.07%	1.35%
30/11/2017	27.3	44.42	6167.3	1.45%	1.14%	1.82%
31/12/2017	26.95	43.81	6146.5	-1.28%	-1.37%	-0.34%
31/01/2018	27.61	41.33	6117.3	2.45%	-5.66%	-0.48%
28/02/2018	26.29	41.56	5868.9	-4.78%	0.56%	-4.06%
31/03/2018	27.86	43.77	6071.6	5.97%	5.32%	3.45%
30/04/2018	28.46	45.56	6123.5	2.15%	4.09%	0.85%
31/05/2018	30.52	49.36	6289.7	7.24%	8.34%	2.71%
30/06/2018	30.09	49.46	6366.2	-1.41%	0.20%	1.22%
31/07/2018	28.8	51.49	6357.9	-4.29%	4.10%	-0.13%
25/08/2018	28.8	51.49	6357.9	0.00%	0.00%	0.00%

Part b:

Calculation of average monthly return
	Stock price	Return
Date	WOW	WES	MKT	WOW	WES	MKT
31/08/2017	25.21	41.33	5744.9
30/09/2017	25.88	41.8	5976.4	2.66%	1.14%	4.03%
31/10/2017	26.91	43.92	6057.2	3.98%	5.07%	1.35%
30/11/2017	27.3	44.42	6167.3	1.45%	1.14%	1.82%
31/12/2017	26.95	43.81	6146.5	-1.28%	-1.37%	-0.34%
31/01/2018	27.61	41.33	6117.3	2.45%	-5.66%	-0.48%
28/02/2018	26.29	41.56	5868.9	-4.78%	0.56%	-4.06%
31/03/2018	27.86	43.77	6071.6	5.97%	5.32%	3.45%
30/04/2018	28.46	45.56	6123.5	2.15%	4.09%	0.85%
31/05/2018	30.52	49.36	6289.7	7.24%	8.34%	2.71%
30/06/2018	30.09	49.46	6366.2	-1.41%	0.20%	1.22%
31/07/2018	28.8	51.49	6357.9	-4.29%	4.10%	-0.13%
25/08/2018	28.8	51.49	6357.9	0.00%	0.00%	0.00%
Average monthly return	1.18%	1.91%	0.87%

 Part c:

Calculation of annual holding return
	Stock price	Return
Date	WOW	WES	MKT	WOW	WES	MKT
31/08/2017	25.21	41.33	5744.9
30/09/2017	25.88	41.8	5976.4	2.66%	1.14%	4.03%
31/10/2017	26.91	43.92	6057.2	3.98%	5.07%	1.35%
30/11/2017	27.3	44.42	6167.3	1.45%	1.14%	1.82%
31/12/2017	26.95	43.81	6146.5	-1.28%	-1.37%	-0.34%
31/01/2018	27.61	41.33	6117.3	2.45%	-5.66%	-0.48%
28/02/2018	26.29	41.56	5868.9	-4.78%	0.56%	-4.06%
31/03/2018	27.86	43.77	6071.6	5.97%	5.32%	3.45%
30/04/2018	28.46	45.56	6123.5	2.15%	4.09%	0.85%
31/05/2018	30.52	49.36	6289.7	7.24%	8.34%	2.71%
30/06/2018	30.09	49.46	6366.2	-1.41%	0.20%	1.22%
31/07/2018	28.8	51.49	6357.9	-4.29%	4.10%	-0.13%
25/08/2018	28.8	51.49	6357.9	0.00%	0.00%	0.00%
Average monthly return	1.18%	1.91%	0.87%
Annualized holding return (1+Monthly return)^12-1	15.09%	25.49%	10.95%

Part d:

Calculation of Standard deviation
	Stock price	Return
Date	WOW	WES	MKT	WOW	WES	MKT
31/08/2017	25.21	41.33	5744.9
30/09/2017	25.88	41.8	5976.4	2.66%	1.14%	4.03%
31/10/2017	26.91	43.92	6057.2	3.98%	5.07%	1.35%
30/11/2017	27.3	44.42	6167.3	1.45%	1.14%	1.82%
31/12/2017	26.95	43.81	6146.5	-1.28%	-1.37%	-0.34%
31/01/2018	27.61	41.33	6117.3	2.45%	-5.66%	-0.48%
28/02/2018	26.29	41.56	5868.9	-4.78%	0.56%	-4.06%
31/03/2018	27.86	43.77	6071.6	5.97%	5.32%	3.45%
30/04/2018	28.46	45.56	6123.5	2.15%	4.09%	0.85%
31/05/2018	30.52	49.36	6289.7	7.24%	8.34%	2.71%
30/06/2018	30.09	49.46	6366.2	-1.41%	0.20%	1.22%
31/07/2018	28.8	51.49	6357.9	-4.29%	4.10%	-0.13%
25/08/2018	28.8	51.49	6357.9	0.00%	0.00%	0.00%
Average monthly return	1.18%	1.91%	0.87%
Annualized holding return	15.09%	25.49%	10.95%
Standard deviation	0.029717	0.030026	0.020986

Part e:

				WOW	WES	MKT
Annualized holding return	15.09%	25.49%	10.95%
Standard deviation	2.97%	3.00%	2.10%

Part f:

WOW		WES
Calculation of cost of equity (CAPM)		Calculation of cost of equity (CAPM)
Risk free rate	2.00%		Risk free rate	2.00%
RM	5.75%		RM	5.75%
Beta	0.770		Beta	0.810
Required rate of return	4.89%		Required rate of return	5.04%

Part g:

	WOW	WES
Beta	0.770	0.810
Return	0.049	0.050

Part h:

Particulars	WOW	WES
Weightage	30%	70%
Beta	0.77	0.81
Portfolio Beta
Portfolio Beta	0.80
Market Risk Premium	5.75%
Risk Free Rate	2.00%
Portfolio Expected Return	6.59%

Part i: 

Through the evaluation on Woolworths and Wesfarmers stock price, it has been concluded that the return from both the stocks are positive and depicting about a great performance of both the stocks. The CAPM calculations brief that the return from WES stocks are higher along with the higher risk. In context with the portfolio, it has been found that the risk of the portfolio is average as well as the return from the portfolio is higher than the individual stocks. So, investors are recommended to invest in the portfolio rather than the individual securities.

References:

AFR. (2018). Current Australian tax cut debate a tale of two populisms. [online]. Retrieved from: https://www.afr.com/opinion/columnists/current-australian-tax-cut-debate-a-tale-of-two-populisms-20180702-h124oh

Henry, K., Harmer, J., Piggott, J., Ridout, H., & Smith, G. (2009). Australia’s future tax system. Canberra, Commonwealth Treasury.

News. (2018). Fact check: Will Australia be uncompetitive on company tax if the Government’s reforms fail?. [online]. Retrieved from: https://www.abc.net.au/news/2017-10-13/fact-check-wii-australia-be-uncompetitive-on-company-tax/9033940

Saad, N. (2014). Tax knowledge, tax complexity and tax compliance: Taxpayers’ view. Procedia-Social and Behavioral Sciences, 3 (ii), 109, 1069-1075.

The Australian. (2018). No, the rich don’t pay a ‘fair share’ of tax. They pay all of it? [online]. Retrieved from: https://www.theaustralian.com.au/national-affairs/opinion/no-the-rich-dont-pay-a-fair-share-of-tax-they-pay-all-of-it/news-story/75bb6cf38d551cc949467103ab474aa8

The conversation. (2018). FactCheck: is Australia’s corporate tax rate not competitive with the rest of the region?. [online]. Retrieved from: https://theconversation.com/factcheck-is-australias-corporate-tax-rate-not-competitive-with-the-rest-of-the-region-37226