QUESTION 5 Max 20 marks
PART A
YEAR 2010 2011 2012 2013 2014 2015
Actual Expected
Amanzi Company R 2.30 R 2.50 R 2.75 R 3.15 N/A N/A
Holiday Resorts 12.00% 11.00% 9.80% 10.00% 10.20% 11.50%
Office Parks 9.00% 9.30% 9.50% See note 1
Retail Buildings 11.00% 13.00% 10.00% 11.50% 12.30% 13.00%
Office parks 2013 2014 2015 2013 2014 2015
State of the economy Expected returns Probability of occurrence (%)
Recession 10.00% 10.30% 9.80% 30.00% 25.00% 27.00%
Normal 10.50% 10.60% 10.20% 50.00% 45.00% 40.00%
Strong growth 12.00% 11.50% 10.50% 20.00% 30.00% 33.00%
A)
HPR = (Pt - Pt-1) + Dt *half mark for formulae
Pt-1
R 0.25
P
R 2.50
r= 10.00% P
B)
ARITHMETIC MEAN =(12%+11%+9.8%)
P
3
r= 10.93% P
C)
Office parks
Expetected
State of the economy Probability
return
Recession 25.00% 10.30% 2.58% P *half mark per variable
Normal 45.00% 10.60% 4.77% P
Strong growth 30.00% 11.50% 3.45% P
r= 10.80% P
D)
PART A
YEAR 2010 2011 2012 2013 2014 2015
Actual Expected
Amanzi Company R 2.30 R 2.50 R 2.75 R 3.15 N/A N/A
Holiday Resorts 12.00% 11.00% 9.80% 10.00% 10.20% 11.50%
Office Parks 9.00% 9.30% 9.50% See note 1
Retail Buildings 11.00% 13.00% 10.00% 11.50% 12.30% 13.00%
Office parks 2013 2014 2015 2013 2014 2015
State of the economy Expected returns Probability of occurrence (%)
Recession 10.00% 10.30% 9.80% 30.00% 25.00% 27.00%
Normal 10.50% 10.60% 10.20% 50.00% 45.00% 40.00%
Strong growth 12.00% 11.50% 10.50% 20.00% 30.00% 33.00%
A)
HPR = (Pt - Pt-1) + Dt *half mark for formulae
Pt-1
R 0.25
P
R 2.50
r= 10.00% P
B)
ARITHMETIC MEAN =(12%+11%+9.8%)
P
3
r= 10.93% P
C)
Office parks
Expetected
State of the economy Probability
return
Recession 25.00% 10.30% 2.58% P *half mark per variable
Normal 45.00% 10.60% 4.77% P
Strong growth 30.00% 11.50% 3.45% P
r= 10.80% P
D)