digestive disorders 1
March 10, 2023
reflection paper 387
March 10, 2023

finance project 25

The company: Auto Zone inc.

Please follow the description:

Imagine that you have $100,000 to invest.You are going to invest it all in one investment for the next five years, at least, at which point you will re-evaluate both your investment and personal situations.

You will invest it all in one of the following investments – these are your only two options:

  • A bank account earning 5% per year.
  • Common stock of __________.

You will be performing the analysis from the perspective of an investor who is 25 years from retirement, and the investor’s income is greater than living expenses. The investor has a liquid net worth of $1,000,000 of which 40% invested in the S&P 500 index, 40% in a medium-duration, high-quality bond fund and 20% in a savings account earning 5% interest per year. You are to determine if the investor should take $100,000 from the savings account and purchase $100,000 of this company’s common stock.

Where are you going to invest your $100,000?Why?

Your recommendation should comprehensively but succinctly provide sufficient information for the investor to approve your recommendation by being able to address the investor’s reasonable questions including the following:

  • What is the problem?What are you trying to figure out?
  • What historical financial information helped you make your decision – ratios, growth rates, margins, projections, competition?
  • What role does risk play and how do you account for it in your analysis?
  • What industry information helped you make your decision – such as competition, overall markets, and state of the economy?
  • What are you assuming about the future?
  • What are the critical factors that led you to choose the option you chose?

Please limit your response to 3 pages, typed, double-spaced, plus no more than two pages of exhibits.The project is both a math and a story assignment: your math has to support your story, and your story has to support your math.Three pages of text plus two pages of exhibits is not a lot to cover this assignment; you need to be concise, relevant, and convincing in those five pages.

There is no right answer.But there are right approaches, wrong answers, and wrong approaches.You will be graded on the quality of your approach, the accuracy of your analysis, and how convincing your argument is.

 
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