Wealth & Risk management

Wealth & Risk management

Coursework: Proposal (30%)

In this project, you are acting as a real estate investment agent advising Mr Abdulla Faisal on rental properties investment. Many investment options are on the table but Abdulla seeks to understand whether buying and renting a property in a defined location is profitable. He can afford buying a property of less than AED1,000,000 with a down payment of from 20% to 25%.

The excel sheet associated with this project outline has been constructed according to the steps described in the textbook and Powerpoint slides for Week_10 investment in real estate.

In the financing sheet, you choose a bank and the relevant interest rate on a mortgage (you should consult with the bank’s website)

This Excel workbook has been designed to assess risk-return attributes of a rental property investment, and follow you though the process of forecasting the income and value of an investment property. The worksheet is flexible enough to accommodate almost any rental properties investment (office, house, shop, and apartment).

Note that the individual worksheets are linked and that they build upon each other. Student can input data only in yellow boxes; the integrated formulas will make all necessary calculations. For the report, you only include the tables and data marked in green colour.

Write a proposal/plan of 2,000 to 3,000 works.

Structure of the report

1. Mortgage options: Report the financing: name the bank, rates and holding period periods, down payment, and the amount of mortgage ( explain why you have chosen this bank (10 marks)
2. Cash flow analysis: Report the cash flow statements and comment on the income to operating expenses ratio(10 marks)
3. Capital budgeting analysis:Report the Internal Rate of Return (IRR) value (after tax), and explain(10 marks)
4. Report the Net Present Value NPV value and explain(after tax)(10 marks)
5. Report the payback period and explain (after tax)(10 marks)
6. Conclusion: Summarise your results for Mr. Abdulla, and recommend whether it is profitable to buy a real estate and rent (compare against other assets such as stocks, gold…)(15 marks)
7. References (5 marks)
8. Overall Project Report – Style and presentation – (5 marks)