Angus Cartwright III Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Angus Cartwright III Case Solution

Both cousins have low money and each option will generate a return, but it is not possible for them to invest in all the options because of the limited funds. So due to this; it is best to find the profitability index of each option, and then after analyzing the ratio it would become easier to invest in particular options. Profitability index includes the time value of money concept, PI greater than 1 tells PV of future cash flows from an investment is higher than the investment amount, shows that it generates profit. And PI of less than 1 shows loss from the investment (What is the Profitability Index?).

Factors Affecting the Financial Return

There are many factors that exists, which might increase or decrease the rate of the investment. Some of them are mentioned below: (Pettinger, 2019).

1.Interest Rate

Investment is strongly influenced by the interest rates. High-interest rates increase their value. If there are high-interest rates; a better rate of return could be achieved by keeping money in the bank. Higher interest rates make investment a higher opportunity cost, because of the interest’s payment.

2.Economic Growth

People investing in achieving future demand. If the economy will improve then the investments in mutual funds or in all sector would also increase the economic growth which is directly related to the investment.

3.Inflation

Inflation rates have an influence on investment. High and variable inflation make more uncertainty in the economy. Countries having a low and stable inflation rate often experience higher rates of investment.

4.Availability of finance

Saving is also an important factor that makes changes in the amount of finance in the country. If resources of saving are increasedthen the rate of investment will automatically increase. If there are seen less options of saving in the economy then the investment rate will also decline.

5.Wages

If wages increase then the productivity of the organizations would also increase, after which the company will generate more returns, which would become the reason behind the increment in the economic investments. Wages also increase the savings of the employees, which they would invest in the real estate or in other options available to have invested in financially. So, overall wages are also directly related to the investment rate.

After having a look at aforementioned factors; we have analyze that the value of the property would reflect against the tax and interest obligations. By the current results, it is analyzed that the very best factor to consider for more returns is the interest rate. Also, the other factors also tend to impact on the returns but the very important factor is the interest rate.

Investors Criteria

1.Best Option for Investor

Property of 900 Stony Walks is the best option for the investors as compared to other three options. And the investor is able to manage the cash required to make this investment, because it is in the range of his requirement.

2.Higher Profit

Higher profit should be attained by investing in 900 stony walks, which gives a higher return, so it is best for the investors to spend their money on this option. Here greater shareholder interest will get generated in the future.(FERNANDO, 2020).

3.Risk

The best option for the investors to go for property under lowest risks, would be Alison Green, as it has less financial obligations with high IRR due to the higher amount of stocks.

4.Increase In-desired equity

The investor wants to go for Alison Green for increasing the equity share, as it has high equity shares and less debt margin. It clearly shows that it will create more returns in the future as compared to the other properties available as the investment options.....................

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Angus Cartwright III Harvard Case Solution & Analysis