Example Of Case Study On Minimum Investment = $ 30,000

Business: Case Study

Starting Right is a newly established company that provides baby food products with a high pricing of their products Brigham & Ehrhardt, 2001). Julia, the founder of the company is in the mindset that the people will buy the products of Starting Right because of its quality products. Sue Pansky is a retired elementary school teacher and willing to invest in the company however she is a conservative and risk avoid investor. Out of these three options, buying of bond option because it is the only option that has no risk association in it. Bond investment would also not consider the inflation factor into consideration, and the corporate return in this particular investment option is 13% which will be continuing in the future with the same amount of percentage. Sue Pansky has the chance to get back $ 20,000 of their initial investment in the matter of five years by investing in the corporate bonds.

Return = 13% per annum
= 30,000 * 13% = 3900
= 3,900 $ * 5 = $ 19,500

Net Worth After 5 years would be

= 30,000 + 19,500 = $ 49,500
Commodity Broker is a risky investor who would like to invest in those securities and commodities which are risky (Carroll, 2007). High Risk means to gain high investment. In this scenario, Ray Cahn is a commodity broker, who is expecting only an 11% chance of success in the succession of investment. It is recommended to Ray Cahn to invest in the common stocks, as it has the highest amount of risk factor in it. Apart from high risk factor, the stance of potential return is also very high which nearly 8% every year is. One the other hand, the related amount of riskiness with this particular investment is also very high, thus, a commodity investor has the guts and ability to minimize the level of risk in the investment to increase their return consequently in the end of the day.
Minimum Investment = $ 30,000
Return Factor = 8% each year

Net Worth After 5 years would be

= 30,000 * (1+8%) ^5 = $ 44,079
Lila battle is yet another potential investor who is intending to invest in one of the three options discussed above. According to the give scenario, Lila battle is expecting positivity in the business of Julia, as Lila is expecting that the chance of succession with Starting Right is very bright and high, however Lila is a conservative about the investment within the company. It is likely to advice Lila to invest in the Preferred Stocks as this is yet another important type of investment vehicle pertains to the company that can be offered to the general investors. Preferred stocks of the company have the chance to increase its return by 4% every year. Preferred stocks have the tendency to get back the original amount of investment after the dilution of the company, and Lila has the chance to gain effectiveness in the return analysis with a positive mindset.
Minimum Investment = $ 30,000
Return Factor = 4% each year

Net Worth After 5 years would be

= 30,000 * (1+4%) ^5 = $ 36,499
Likewise Lila Battle, there is yet another person who is on the same rope related to investment management and concern, which is George Yates (Ehrhardt & Brigham, 2003). George Yates is also expecting that the chance of success with the position of Starting Right is very positive and high, and Julia has the chance to increase their position effectively in the market with zeal. George Yates is also recommended to invest their money in the preferred stocks of the company like Lila as it is the only way they can have effectiveness in the market. Inflation factor may influence over the investment return of the preferred stock, however the chance of getting higher return is powerful and effective in this particular provision. George Yates has the chance to get compensation at the time of the dilution of the company which is again a positive sign from the standpoint of the company with a positive attitude.
Minimum Investment = $ 30,000
Return Factor = 4% each year

Net Worth After 5 years would be

= 30,000 * (1+4%) ^5 = $ 36,499
Baby Food market is a booming market, in which both local and international players are striving hard to maintain their market share. Nestle and Kraft Foods already maintained a strong and accelerating market in this particular provision, however according to the case study, Starting Right can be very effective in the near term as far as getting their market share and value in the future. Peter Metarko is expecting that that Starting Point will certainly make its effectiveness in the Baby Food market. By considering the optimistic value of Peter, it is recommended to Peter to have their investment in the common stocks of the company which subjected to have high return and high risk with the stocks of the company.
Minimum Investment = $ 30,000
Return Factor = 8% each year

Net Worth After 5 years would be

= 30,000 * (1+8%) ^5 = $ 44,079
Fund raising is an extremely important aspect that associated with an organization, and the chance associated with an organization as far as increasing their level of efficacy is very low, if funds would not have been raised with a positive mind and attitude. Julia Day is expecting to increase their funds from one of three methods mentioned above; however it will cost a lot to them. Julia can offer some alternative like a sort of compensation to the players who are expecting in one of the investment vehicles, but Julia should not delete any financial alternative from the list, as they are very effective for attracting both risky and risk avoided investors.

References

Brigham, E., & Ehrhardt, M. (2001). Financial management. Fort Worth, Tex.: Harcourt Brace College.
Carroll, N. (2007). Financial management for pharmacists. Philadelphia: Wolters Kluwer/Lippincott Williams & Wilkins.
Ehrhardt, M., & Brigham, E. (2003). Corporate finance. Mason, Ohio: Thomson/South-Western.