Assignment 2: LASA 1—Financial Decisions
In both your professional and personal life, you will make a variety of decisions. You should consider the financial and nonfinancial aspects while making decisions.
To evaluate scenarios, you will also use some tools such as net present value (NPV) and return on investment (ROI) that you have discussed so far.
In this assignment, you will evaluate the financial aspects of making decisions.
Investigate any two of the following financial decisions:
• Using net present value calculations, determine which has a higher ROI
o Buying a Chevrolet Impala today for $30,000, putting $15,000 down and taking a six-year loan for the rest at 5%
o Leasing the Impala for 4 years at $329 a month. Since $4000 is due when the lease is signed, the rate will equal to 5%.
Show your work and explain your rationale.
• Commit to buy a vacation home in the climate of your choice, rent the home out when you are not using it, or sign a five-year lease for the home for the two months a year you plan on using it.
• Another buy-or-lease alternative. You could buy the home for $300,000, putting 20% down and renting it out at $1400 a month. Which would make more sense? Renting or leasing the home? Explain your rationale.
• Lease your home for the next three years or sell it with the intent to return to the same geographic area after you complete a three-year expatriate assignment in the country of your choice.
• Given the facts above, should you lease the house or sell it? The current market value is approximately $320,000. Explain your rationale, and show your work.
For the two options that you selected (and using the figures given above for those options), investigate the realistic assumptions for your location and include the information you found in the analysis. Create a paper in about 1,000–1,200 words, including the following:
• Initial information/approach: purchase price, rebate, down payment, amount to finance, etc.
• Payments formulas and calculations
• Explanation of the financial factors that you are employing in the selected decisions
• Conclusion containing the “best answer” for your personal life on the basis of these financial factors
• Probability of following the recommended “best answer” (assuming that these are the only decision options)
• By Wednesday, November 25, 2015, save your paper as M3_A2_lastname_firstinitial.doc, and submit it to the M3: Assignment 2 Dropbox.
This LASA is worth 200 points and will be graded according to the following rubric.
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