LASA 1—Financial Decisions

M3 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), internal rate of return (IRR),  modified internal rate of return (MIRR), payback, discounted payback,  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 four financial decisions:
1) Using net present value calculations, determine which has a higher  ROI. Assume the average mileage under both options is 15,000 miles. The  car will be sold for its Kelly Blue Book value at the end of ownership  or it will be returned to the leasing dealership for no additional  lease/return/mileage cost. The automobile being considered is a 4-cyl,  2.5 liter, two-wheel drive, Nissan Rogue sport utility. At the end of  the 6 years, the automobile is in very good condition. Tax, title, or  license fees are not considered under either option.

Buying a Nissan Rogue today for $32,000, putting $10,000 down and taking a six-year loan for the rest at 4%

Leasing the Rogue for 6 years at $360 a month with a down payment of  $3,500 due at delivery. The car must be returned at the end of the  lease. 15,000 miles per year are allowed under this lease plan.

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Show your work and explain your rationale.

2) 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. You will need  to make up the numbers for your home for this exercise.

3) A different buy-or-lease alternative—you could buy  a home for $300,000, putting 20% down and renting it out at $1,700 a  month. Which would make more financial sense? Buying or leasing the  home? Explain your rationale.
4)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)

Submission Details:

By the due date assigned, save your paper as M3_A2_lastname_firstinitial.doc and submit it to the Submissions Area.

This LASA is worth 200 points and will be graded according to the following rubric.
Grading Criteria  Maximum Points    Communicates understanding of financial factors employed in the selected decisions.  40    Communicates the ability to analyze the situation and provide optimal conclusions on the basis of financial factors.  80    Communicates the ability to assess the probability of following the recommended solutions  60    Conveys through written word understanding and application of the essential assignment components  20    Total:  200

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