Why Choose Us?
0% AI Guarantee
Human-written only.
24/7 Support
Anytime, anywhere.
Plagiarism Free
100% Original.
Expert Tutors
Masters & PhDs.
100% Confidential
Your privacy matters.
On-Time Delivery
Never miss a deadline.
Question 1(18 marks) Which company would you expect to have a higher PE ratio, Tencent or HK MTR (train)? (4 marks) Which company would you expect to have a higher profit margin, an appliance manufacturer or a grocery store? Explain
Question 1(18 marks)
- Which company would you expect to have a higher PE ratio, Tencent or HK MTR (train)?
(4 marks)
- Which company would you expect to have a higher profit margin, an appliance manufacturer or a grocery store? Explain. (4 marks)
- Which company would you expect to have a higher current ratio, a jewelry store or an online bookstore? Explain. (10 marks)
Question 2 (20 marks)
Carlson is currently 35 years old and would like to retire at age 60 (i.e. 25 years later). He wants to have enough saving when reaching 60 to support his post retirement life for 28 years (i.e. he expects he will die at around 88 years old). He would like to seek for your assistance in formulating his retirement plan.
Required:
- Based on the budget constructed, he estimated that he would spend $350,000 every year during his post retirement life. Assuming he could earn a 7% return per annum during his post retirement period, calculate how much retirement saving Carlson needs to have when he reaches 60 years old.
- At the moment Carlson has a saving of $800,000. Assuming he could earn a 5% return per annum for the next 25 years:
- Would Carlson have enough retirement saving at 60 as calculated per (2) above?
- If not, what is the approximate annual return Carlson’s saving needs to achieve if he wants to have enough retirement saving at 60 as calculated per (1) above? For this part, please use Appendices A to D to find out the approximate annual return.
- By using a financial calculator, calculate the exact annual return required if Carlson would like to have enough retirement saving at 60 as calculated per (1) above. For this part, please use a financial calculator. (9 marks)
- Carlson would like to make use of his current saving of $800,000 plus contributing a fixed amount of annual saving at the end of the coming 25 years to achieve the retirement saving as calculated per (1) above.
Calculate the annual saving Carlson needs to contribute during the next 25 years, assuming both the saving of $800,000 and the annuity could earn a 5% return per
annum. (7 marks)
Expert Solution
a) Tencent,
Tencent is in the field of IT sector and HK MTR in transportation sector. Information technology sector has started to grow at a brisk rate. It still has along way to go and ample amount of opportunities available. Transportation sector is highly consumer oriented and the cost of oepration is also high Whereas the IT sector cost are usually low and mostly includes human resource and computer compnents. In countries like India these are available at very low cost( ex: TCS becoming the most valued IT sector company in the world). Hence opreating expenses in low hence leading to higher PE ratio which is quite opposite to HK MTR ( transportation sector).
b) Grocery Store,
Applaince manufacturer has ample amount of market, at the same time its highly risk oriented and highly competitve. Every now and then the company has to go research and developement(hence the R & D costs are very high). The manufacturer as to lower costs to provide the products at low price as subsitute factor is possible in this sector.
Wheres as grocery store directly deals with customers and have knowledge as to what are the needs. Hence they know which product is to maintained to meet demand and supply. Usually the costs that low, products that are pruchases and maintenance. Hence leading to more profit magin. This also quitely depends on the size of operations.
c) Jewelary store,
The profit margins in jewelary market is high and also risk oriented. Other than certain circumstances such as economic crisis, government regulations etc.. the demand for gold never dies. Its a huge market and in turnover of money is also very high. Henceforth company shall have the ability to meets the current need and working capital adequtely.
Whereas the online book company might have very less cost of operation but at the same time its not easy to for the company to sustain. The physical market of books is still the number one choice for a book reader. The company might not be able to create adeqaute revenue to meet its own demand. Hence not possible to maintain good current ratio. These company is also affected by the priacy market.
please see the attached file.
Archived Solution
You have full access to this solution. To save a copy with all formatting and attachments, use the button below.
For ready-to-submit work, please order a fresh solution below.
