Case Study Solution of Jaguar Land Rover plc: Bond Valuation

We write Jaguar Land Rover plc: Bond Valuation case study solution using Harvard Business Review case
writing framework & HBR Finance & Accounting learning notes. We try to cover all the bases in the field
of Finance & Accounting, Financial markets and other related areas.

Objectives of using various frameworks in Jaguar Land Rover plc: Bond Valuation case study solution

By using the above frameworks for Jaguar Land Rover plc: Bond Valuation case study solutions, you can
clearly draw conclusions on the following areas –

What are the strength and weaknesses of Jaguar Rover (SWOT Analysis)

What are external factors that are impacting the business environment (PESTEL Analysis)

Should Jaguar Rover enter new market or launch new product (Opportunities & Threats from SWOT
Analysis)

What will be the expected profitability of the new products or services (Porter Five Forces Analysis)

How it can improve the profitability in a given industry (Porter Value Chain Analysis)

What are the resources needed to increase profitability (VRIO Analysis)

Finally which business to continue, where to invest further and from which to get out (BCG Growth
Share Analysis)

SWOT Analysis of Jaguar Land Rover plc: Bond Valuation

SWOT analysis stands for – Strengths, Weaknesses, Opportunities and Threats. Strengths and
Weaknesses are result of Jaguar Rover internal factors, while opportunities and threats arise from
developments in external environment in which Jaguar Rover operates. SWOT analysis will help us in not
only getting a better insight into Jaguar Rover present competitive advantage but also help us in how
things have to evolve to maintain and consolidate the competitive advantage.

Strengths

- Strong Balance Sheet – The financial statement of Jaguar Rover looks strong and will help the company
going forward.

- High customer loyalty & repeat purchase among existing customers – Jaguar Rover old customers are
still loyal to the firm even though it has limited success with millennial. I believe that Jaguar Rover can
make a transition even by keeping these people on board.

Weakness

- Little experience of international market – Even though it is a major player in local market, Jaguar
Rover has little experience in international market. According to S. Veena Iyer , Jaguar Rover needs
international talent to penetrate into developing markets.

- Low profitability which can hamper new project investment – Even though Jaguar Rover financial
statement is stable, but going forward Jaguar Rover 5-7% profitability can lead to shortage of funds to
invest into new projects.

Opportunities

- Lucrative Opportunities in International Markets – Globalization has led to opportunities in the

international market. Jaguar Rover is in prime position to tap on those opportunities and grow the
market share.

- Developments in Artificial Intelligence – Jaguar Rover can use developments in artificial intelligence to
better predict consumer demand, cater to niche segments, and make better recommendation engines.
Threats

- Customers are moving toward mobile first environment which can hamper the growth as Jaguar Rover
still hasn’t got a comprehensive mobile strategy.

- Home market marketing technique won’t work in new markets such as India and China where scale is
prized over profitability.

Once all the factors mentioned in the Jaguar Land Rover plc: Bond Valuation case study are organized
based on SWOT analysis, just remove the non essential factors. This will help you in building a weighted
SWOT analysis which reflects the real importance of factors rather than just tabulation of all the factors
mentioned in the case.

What is PESTEL Analysis

PESTEL /PEST / STEP Analysis of Jaguar Land Rover plc: Bond Valuation Case Study

PESTEL stands for – Political, Economic, Social, Technological, Environmental, and Legal factors that
impact the macro environment in which Jaguar Rover operates in. S. Veena Iyer provides extensive
information about PESTEL factors in Jaguar Land Rover plc: Bond Valuation case study.

Political Factors

- Political consensus among various parties regarding taxation rate and investment policies. Over the
years the country has progressively worked to lower the entry of barrier and streamline the tax
structure.
- Little dangers of armed conflict – Based on the research done by international foreign policy
institutions, it is safe to conclude that there is very little probability of country entering into an armed
conflict with another state.

Economic Factors

- According to S. Veena Iyer . Jaguar Rover should closely monitor consumer disposable income level,
household debt level, and level of efficiency of local financial markets.

- Foreign Exchange movement is also an indicator of economic stability. Jaguar Rover should closely
consider the forex inflow and outflow. A number of Jaguar Rover competitors have lost money in
countries such as Brazil, Argentina, and Venezuela due to volatile forex market.

Social Factors

- Demographic shifts in the economy are also a good social indicator for Jaguar Rover to predict not only
overall trend in market but also demand for Jaguar Rover product among its core customer segments.

- Consumer buying behavior and consumer buying process – Jaguar Rover should closely follow the
dynamics of why and how the consumers are buying the products both in existing categories and in
segments that Jaguar Rover wants to enter.

Technological Factors

- Proliferation of mobile phones has created a generation whose primary tool of entertainment and
information consumption is mobile phone. Jaguar Rover needs to adjust its marketing strategy
accordingly.

- Artificial intelligence and machine learning will give rise to importance of speed over planning. Jaguar
Rover needs to build strategies to operate in such an environment.

Environmental Factors
- Environmental regulations can impact the cost structure of Jaguar Rover. It can further impact the cost
of doing business in certain markets.

- Consumer activism is significantly impacting Jaguar Rover branding, marketing and corporate social
responsibility (CSR) initiatives.

Legal Factors

- Property rights are also an area of concern for Jaguar Rover as it needs to make significant Financial
markets infrastructure investment just to enter new market.

- Intellectual property rights are one area where Jaguar Rover can face legal threats in some of the
markets it is operating in.

What are Porter Five Forces

Porter Five Forces Analysis of Jaguar Land Rover plc: Bond Valuation

You can use Porter Five Forces to analyze the industry in which Jaguar Rover operates in and what are
the levers of profitability in those segments – differentiation, Financial markets. Michael Porter Five
Forces of Strategy are –

Competition among existing players,

Bargaining power of suppliers,

Bargaining power of buyers,

Threat of new entrants, and

Threat of substitutes

Porter Five Forces can help in answering following questions for writing case study solution for Jaguar
Land Rover plc: Bond Valuation -

How attractive is the industry described in the Jaguar Land Rover plc: Bond Valuation?

Are some segments more attractive than others? Why? Identify, analyze, and evaluate the strategy of
the Jaguar Rover featured in the Jaguar Land Rover plc: Bond Valuation case study.

What are the pros and Cons of each strategy? What impact Jaguar Rover actions will have on industry
and economy on whole?

What is VRIO Analysis

VRIO Analysis of Jaguar Land Rover plc: Bond Valuation

VRIO stands for – Value of the resource that Jaguar Rover possess, Rareness of those resource, Imitation
Risk that competitors pose, and Organizational Competence of Jaguar Rover. VRIO and VRIN analysis can
help the firm.

Resources Value Rare Imitation Organization Competitive Advantage

Access to Critical Raw Material for Successful Execution Yes Yes, as other competitors have to come
to terms with firm's dominant market position Can be imitated by competitors Yes Providing
Sustainable Competitive Advantage

Brand awareness Yes Yes, Jaguar Rover has one of the leading brand in the industry No
Jaguar Rover has utilized its leading brand position in various segments Sustainable
Competitive Advantage

Sales Force and Channel Management Yes No Can be imitated by competitors Still there is lot
of potential to utilize the excellent sales force Can provide sustainable competitive advantage.
Potential is certainly there.

What is Porter Value Chain

Porter Value Chain Analysis of Jaguar Land Rover plc: Bond Valuation

As the name suggests Value Chain framework is developed by Michael Porter in 1980’s and it is primarily
used for analyzing Jaguar Rover relative cost and value structure. Managers can use Porter Value Chain
framework to disaggregate various processes and their relative costs in the Jaguar Rover.

This will help in answering – the related costs and various sources of competitive advantages of Jaguar
Rover in the markets it operates in. The process can also be done to competitors to understand their
competitive advantages and competitive strategies.

According to Michael Porter – Competitive Advantage is a relative term and has to be understood in the
context of rivalry within an industry. So Value Chain competitive benchmarking should be done based on
industry structure and bottlenecks.

What is BCG Growth Share Matrix

BCG Growth Share Matrix of Jaguar Land Rover plc: Bond Valuation
BCG Growth Share Matrix is very valuable tool to analyze Jaguar Rover strategic positioning in various
sectors that it operates in and strategic options that are available to it.

Product Market segmentation in BCG Growth Share matrix should be done with great care as there can
be a scenario where Jaguar Rover can be market leader in the industry without being a dominant player
or segment leader in any of the segment.

BCG analysis should comprise not only growth share of industry & Jaguar Rover business unit but also
Jaguar Rover - overall profitability, level of debt, debt paying capacity, growth potential, expansion
expertise, dividend requirements from shareholders, and overall competitive strength.

Two key considerations while using BCG Growth Share Matrix for Jaguar Land Rover plc: Bond Valuation
case study solution -

How to calculate Weighted Average Market Share using BCG Growth Share Matrix

Relative Weighted Average Market Share Vs Largest Competitor

Swot Analysis's of Jaguar Land Rover Plc Bond Valuation defensive behavior

Swot Analysis's of Jaguar Land Rover Plc Bond Valuation protective habits in different

scenarios throughout her role as a project manager is likewise a major factor which

ultimately caused her removal from the project and for that reason did not allow her to get

the project implemented.She acknowledges the truth that she displays indications of

defensives not only towards Kane and Parker throughout scenarios when she was freely

attacked in meetings but also towards Dorr who was the head of the company and was not

utilized to being challenged publically. While we can not state that Swot Analysis of Jaguar

Land Rover Plc Bond Valuation was displaying an act of insubordination, it might have

challenged Dorr's authority that a subordinate was honestly opposing him despite the truth
that he was understood for getting furious with others in the organization if they acted. The

concept of putting a senior executive in a jeopardizing position in front of others can not be

taken favorably by him in any case and Swot Analysis of Jaguar Land Rover Plc Bond

Valuation was extending this a bit too far without realizing that it was not being taken as an

act of reason on her part however was being considered an offensive action by others.

Tactical mistakes

Swot Analysis Jaguar Land Rover Plc Bond Valuation was making tactical errors along the

way too which were making it tough for her coworkers and senior executives to remain on

the same page with her when it came to comprehending the complexities of the project. The

reality that she was attempting to provide the minutest information of the project to the

group was not taken favorably given that there was excessive detail that had to be

understood by the employee. Instead of providing an overview of the entire plan which

could have been comprehended by the senior executives, Swot Analysis had utilized a step

by action method. While this may have seemed like an efficient method to keep both Dan

and Dorr on the same page concerning the project details, it was definitely giving them the

opinion that Swot Analysis of Jaguar Land Rover Plc Bond Valuation was complicating the

project to an extent where it would end up being challenging for the staff member to reach a

consensus. In addition the fact that she had clashes with the senior executives left no

reason to let her pursue the project further as a project manager given that it was only

adding to the issues rather than discovering an easy path to handle the required change.

Additional Factors acting as catalysts to Swot Analysis’s of Jaguar Land

Rover Plc Bond Valuation failure as a Project Manager
Our analysis has actually recognized a number of defects in Swot Analysis's of Jaguar Land

Rover Plc Bond Valuation attitude which caused her ultimate elimination from the project

and therefore she was unable to get the application completed according to her initial

strategy. Nevertheless, we can identify numerous other locations which are similarly

responsible for Swot Analysis's removal from the program.

It should be noted that Dorr played a major function in creating a confusing atmosphere

which could have been avoided with efficient management. The fact that he was putting

Swot Analysis in a new role as a line manager where she was going to come across

difficulties in the type of Parker's reliable attitude and Kane's offending behavior required

support from him as the head of the company. While he had been perfectly aware of Swot

Analysis's of Jaguar Land Rover Plc Bond Valuation argumentative and challenging streak,

he was not going to accept that throughout discussions. Even if he was troubled by her

behavior, his individual relationship with her had actually been strong enough in the past to

have had a one to one session with her where he might have interacted his concerns to her.

Furthermore we can see how Swot Analysis of Jaguar Land Rover Plc Bond Valuation had

actually been positioned in this role in the beginning without going into any more

conversations with her regarding her issues about Parker. While Jaguar Land Rover Plc

Bond Valuation had been wanting to discuss these problems before going on with this role,

Dorr had managed to put an end to the conversation and had not shown any support to her

throughout her role as a project supervisor which could have motivated her to share her

concerns with him concerning the project or her relationship with other executives.
The fact that Swot Analysis of Jaguar Land Rover Plc Bond Valuation was a woman in a

male controlled company might have been one significant factor why she was not able to

get the project carried out in the very first location. While there is no genuine evidence in the

event that it was a male dominated organization, the truth that she was dealing with direct

opposition from senior executives like Kane and Parker and her immediate supervisor Dan

was likewise a male showed how she was susceptible when it came to being a female who

was being bothered by colleagues like Kane. Additionally her mentor, Dorr was likewise a

controling figure in the company and the overall scenario does show that Swot Analysis of

Jaguar Land Rover Plc Bond Valuation was in a susceptible circumstance specifically as

the environment did seem to appear like a male controlled one. This circumstance had

actually increased her vulnerability and defensiveness which could be a significant factor

causing her failure to act in a prudent manner when it boiled down to developing social

relationships.

Structure of Jaguar Land Rover Plc Bond Valuation SWOT analysis

In order to carry out the analysis it is important to understand each element of SWOT i.e. strength,
weakness, opportunities and threats.

Jaguar Land Rover Plc Bond Valuation Strength

Strength is a characteristic that adds value to something by making it more special, unique and
advantageous when compared. In this element of SWOT the abilities and the key properties of
organization are discussed that gives an organization an advantage over other organizations by making it
more competitive. It defines the characteristics and situations of an organization which makes it more
effective and efficient when compare with its competitors.

It defines the areas in which the organization hold a command or is good at doing it and that provides
the organization and important capability. It can be a skill, a resource, image, market leadership, relation
with buyer or supplier or any other advantage relative to its competitors that fulfill the needs of the
market by providing the organization with a comparative advantage.
Jaguar Land Rover Plc Bond Valuation Weakness

Jaguar Land Rover Plc Bond Valuation Weakness refer to the situation in which the existing capabilities
and the resources the company holds are weaker or not sufficient compared to others organizations in
the market. In other words it means the aspects in which the organization is less efficient and needs to
improve in order to align with the market trends. As these aspects negatively affect the overall
performance of the organization by making it weaker compared to its competitors.

These are the factors that an organization lacks and does poorly in comparison to the organizations
operating in the same market at the same level. It is a deficiency or limitation of resources, capabilities,
skills that majorly affect the organizations effective performance. Management capabilities, Facilities,
financial resources, marketing skills and the weak brand image can be the sources of weakness.

Jaguar Land Rover Plc Bond Valuation Opportunities

Jaguar Land Rover Plc Bond Valuation Opportunity is an advantage and the driving force for an
organization. It is the convenient time or situation that is present in the environment and will help the
organization in achieving its goals. It is a factor that contribute positively towards the growth of the
organization. It is a condition existing in the external environment that allow the organization to take an
advantage of the organizational strengths, and help in overcoming the weaknesses and to neutralize the
threats present in the environment.

Jaguar Land Rover Plc Bond Valuation Threats

Threats are the factors that prevent the organization from the actualization of an activity. It is an
unfavorable situation that exist in the environment making it difficult for the organization to achieve its
defined goals. It is a situation that arises as a result of the changes that took place in the immediate or
distant environment, preventing the organization from maintaining its existence and superiority in the
growing competition and are disadvantageous for the organization.

All the environmental factors are consider as a threat to an organization that could affect the efficiency
and effectiveness of the organization.

Limitations of Jaguar Land Rover Plc Bond Valuation SWOT analysis

However there are certain limitation attached with it. The SWOT analysis is only a one stage of the
business planning process and do not provide the organization with an in-depth analysis or research that
could lead to a firm decisions. Apart from this it only cover the issues that are definite and doesn’t
priorities them. In addition to this it does not provide any solution or alternatives decisions. As a
framework, SWOT does processes a value but it doesn’t provide the organization with any specific
direction on how the key aspects can be identified. It significantly rely on the capabilities of the
manager that how effectively it can prioritize and determine the most important element. Another
limitation associated with Jaguar Land Rover Plc Bond Valuation SWOT analysis is that it provide equal
weight to each factor regardless of their impact or relevancy.

Jaguar Land Rover Plc Bond Valuation Porter’s Five Forces

Jaguar Land Rover Plc Bond Valuation Porter five forces reflects the competitive environment of an
industry. It is a strategic tool that is used to avoid or minimize the risk of losing the competitive edge
that the organization has and to ensure the profitability of the products in the long run. The company
holds its vision closely as it allows them to orientate its innovation in terms of choices regarding the
investment and strategies. Within the industry the businesses profitability is dependent upon the
following forces:

Competitive rivalry

Threats of new entrants

Threats of substitute

Bargaining power of suppliers

Bargaining power of customers

Structure of porter’s five forces analysis

Jaguar Land Rover Plc Bond Valuation Competitive rivalry

The competition among the firms help in identifying the lucrativeness of an industry where companies
are competing hard in order to maintain their power within the industry. The Jaguar Land Rover Plc
Bond Valuation competition is moreover on basis of diversity, the development within the sector and
the barriers related to entrance in the market. The competitive rivalry is the analysis of the brands and
the product, its strengths and weakness along with the strategies, competitors and the share in the
market.

Threat of new Jaguar Land Rover Plc Bond Valuation entrants

It is in the favor of the companies that exist in the market to create barriers for the new entrants to
prevent them from entering into the industry. The organizations could be the new companies or the
companies that are planning to diversify itself in the market. The barriers can be both industrial and
legal. Apart from this the size and the reputation of the companies that are already operating in the
market also play an important. Furthermore the cost related to the entry, access to raw materials,
barriers related to culture and technical standards also play a major role and can affect the decision of
the new entrants in the market.
Threat of substitute products

The Jaguar Land Rover Plc Bond Valuation substitute products are an alternatives that are available in
the market at comparatively better prices. Such products prevail due to the technological and innovative
advancement. Due to which the products being produced by the companies that are already existing in
the market and is using the same technology are than replaced by the other company’s products that
are comparatively better in terms of price and quality and are being produced from sectors with
significant profits. The substitute products are dangerous as the companies are under constant threat of
being replaced.

High threat of substitute leads to low profitability as it limits the industry profits by placing a price ceiling
due to the fear of being substituted by other product. Apart from this it also affect the growth potentials
of the industry as a whole but reducing the profitability margins.

Bargaining power of suppliers Jaguar Land Rover Plc Bond Valuation

Powerful suppliers possess more power to capture significant value for themselves by demanding high
prices while limiting the quality and the quantity of the product or services or by transferring the cost on
the participant of the industry. Many condition imposed by the suppliers generally include the increase
in price while compromising the quality and quantity.

A bargaining power of a supplier in the market is strong if:

It is more concentrated than the industry it is selling to.

It is not heavily relying on the industry for its profits

If the participants in the industry have to incur high cost for switching suppliers or the firms are located
adjacent to the suppliers manufacturing facilities.

The product being offered by the suppliers are highly differentiated.

And when there is no close substitute available for the products being supplied by the suppliers.

Jaguar Land Rover Plc Bond Valuation Bargaining power of customers

The buyers having strong bargaining power can highly influence the profitability of the suppliers
operating in the market by imposing condition that are not much favorable for the suppliers in terms of
price, quality or service. Therefore choosing clients often become crucial for the organizations as to
avoid the situation of being highly depended on the buyers. The level of interest and concentration of
buyers toward the product gives them more or less power.
Powerful buyers could flip the side of the powerful supplies by forcing the prices to move downwards
and by demanding high quality and services by creating a competition between the participants in the
industry on the basis of price and quantity. Jaguar Land Rover Plc Bond Valuation Customer are deemed
strong if they contain negotiating leverage specifically if the industry is sensitive to price, the buyers can
pressure suppliers for further price reductions.

The customer are assumed to have strong buying power in case:

If the number of buyer are limited or each of the buyer purchases large quantity relative to the size of
the suppliers.

The products in the industry are standardized or are undifferentiated.

The cost of switching is comparatively low.

Limitations of Jaguar Land Rover Plc Bond Valuation Porter’s five forces

Though the model from a strategic point of view is an important tool but there are certain limitation
associated with the application of the porter five forces model. The framework use a classic perfect
market and relatively a static structure of market i.e. it only incorporates the aspects of the present day
and only incorporate the events that took place within the short term period. Jaguar Land Rover Plc
Bond Valuation Apart from the model only provide the overview of the environment and does not
define the industry clearly. As it can be difficult to group the companies having similar business lines
and to call it an industry. Therefore Porter framework due to its limitation is too inert to be depending
upon outside the short term to medium, term objectives. It emphasizes more on external factors and
ignore the specific factors that are more specially related with the firm. The model doesn’t incorporate
new business model and the changing dynamics of the market and the impact of globalization.
Moreover it does not consider non-market forces.

Jaguar Land Rover Plc Bond Valuation PESTLE Analysis

PESTLE analysis is one the significant and widely used tool or framework mostly by organizationswith the
intent of considering the market environment before commencing the process of marketing. In fact, the
analysis of the environment needs to feed all planning aspects as well as it should be continuous. The
internal environment of an organization includes internal customers or staff, wages, office technology
and finance etc. whereas the micro environment includesthe external customers of an organization,
distributors or agents, competitors and suppliers. Additionally, the macro environment includes legal
and political factors, sociocultural forces, economic forces and technological factors.

PESTLE Analysis
PESTLE Analysis

For the purpose of maximizing the benefits of such analysis, it is important that it should be used on
regular basis so that an organization would be able to identify the trends. The effect of the particular
external factors or forces might have extreme consequences for the specific department or divisions,
also the analysis better helps companies in clarifying the needed or required changes, thus identifying
the potential options (Norton, 2008).

The factors or forces are discussed below;

Political forces:

These are the Jaguar Land Rover Plc Bond Valuation forces that tends to be altered by the influence of
government on the infrastructure of country. The political factors may involves environment
regulations, employment laws, tariffs, tax policy, trade restrictions, political stability and reforms. It is
noteworthy, that the charities needs to be included where a government are not willing services and
goods to be provided.

Economic factors:

The Jaguar Land Rover Plc Bond Valuation economic factors or forces involves interest rates, inflation,
and growth of economy, cost of living, working hours, wage rate and exchange rates. Combining these
factors, it last greater and inevitable impact on organization.

Social factors:

The culture or social influence on certain businesses vary from country to country. It is significant to
consider these factors. The social factors includes safety and health consciousness, various
demographics, population growth rates and cultural aspects.

Technological factors:

Notably, Jaguar Land Rover Plc Bond Valuation technology is one of the most important way of being
competitive in the highly competitive market arena. Not only this, it drives globalization, the factors
includes environmental and ecological aspects, and available services as well as products. An
organization should innovate and be compatible with the technologies.

Legal factors:
The Jaguar Land Rover Plc Bond Valuation legal factors involves the certain laws and regulations which
might effect on the business operations of an organization. It also includes impending and current
legislation that tends to impact on the industry in areas including competition, employment, safety and
health. An organization should consider the influence of the national and international laws where the
organization would originate the business operations.

Environmental factors:

The environmental factors include all those factor lasting impact or influence, the surrounding
environment most likely determine environmental factors. The factors involves awareness of the
seasonal or climate change or terrain variation. The analysis of the environment including internal and
external elements is vital for organization since it impacts on the performance of an organization.

Limitations of Jaguar Land Rover Plc Bond Valuation PESTLE:

The limitations are discussed below;

The external factors are dynamic and can be change at a rapid pace. Overtime, the changes might be
occur in less than one day, therefore the companies should make it tricky in order to predict how and
why these forces might influence the future or present of the certain project.

There are many occasions, in which the environmental changes have an adverse influence on the project
that might not be noted in the initial stages of project, indicating that the uncertainty sis still there even
after the pestle analysis have carried out. This in turn might defeating the prime reason of the pestle
analysis.

The usual or common procedure for pestle analysis is presenting a simple list of the environmental
factors affecting the project. Until& unless, the organization critically examine the attributing factors,
the analysis’s findings does not seem to be of greater value or consideration.

The analysis is supposed to be insufficient for the strategic planning objective, since it likely scans the
externa environmental, whereas avoiding the competitive scenarios and internal environment.
Nonetheless, the analysis needs to be conjunction with other frameworks such as S-W-O-T analysis in
order to get a more realistic picture.

Jaguar Land Rover Plc Bond Valuation Conclusion

To conclude, PESTLE analysis is considered as an effective tool of planning and it offers viable and
effective technique foranalyzing and scanning the operating environment of an organization. The
effectiveness of the analysis highly depends on the accuracy of the collected data, updates to
accommodation changes in timely manner and other tools trimming down the PESTLE limitation to
some extent.
Jaguar Land Rover Plc Bond Valuation VRIO Analysis

The Jaguar Land Rover Plc Bond Valuation VRIO analysis is basically the extension of the Jaguar Land
Rover Plc Bond Valuation PESTEL analysis, which allows the oragnation to understand the resources,
competitive edge, value proposition and its value in the market. The Basic idea of the Jaguar Land Rover
Plc Bond Valuation VRIO model is to analyze the factor that are valuable for the organization. Such may
include the supply chain efficiency, value chain maintenance, technology or other factors, that offer
value to the company and in return allows the organization to offers similar value to the customer.

In addition, it also analyze the factors that are Rare within the organization. Such analysis of the
compatibilities or capacities is important, as it allows the organization to develop the sustainable
competitive edge over it. The value factor analysis of the organization gives an eye opening view to the
management and also offers the solution on where the organization may build the market utilizing the
area value creation factors

Moreover, it also determines the Imitable factors. These are the factors that are easily imitable by the
organization (other players) and thus needs to be considered. In addition, the imitable factor also
outlines the factors that are inimitable by the other organization. These in-imitable factors allows the
organization to developed the sustained competitive edge in the market and hence enhances the
chances of sustainability ion the long-term.

Lastly, Organization factor includes the resources and functions that are offering certain value to the
company. This determination of organization allow to the company to understand what additional
things or function is required to be in place, or needs to be improvised in t=long term.

All in all, the advantage of using the VRIO analysis is to determine the sustained competitive edge in the
market. Such determination is important for the organization to expand in the market and continue its
operations with sound profitability. In addition, it offers clear view what are the factors that are valuable
and inimitable o can be easily imitated in the long-term, thus preparing the organization to either use
the valuable factor to delight the customer and develop a sustained competitive edge, or enhance its
value and oragnation strengths to develop a strong competitive edge in the market, which is important
to develop and maintain in order for the organization to remain profitable and allow the maintenance
of market share in the long-term (Hille, 2015).

Jaguar Land Rover Plc Bond Valuation Financial Analysis

Jaguar Land Rover Plc Bond Valuation Financial analysis is the assessment of the stability, viability as well
as profitability of a sub-business, business or project. It is the process that is widely used for identifying
the financial weaknesses and strengths of the corporations, this can be done by building the relationship
between items of the profit & loss account and balance sheet. It can be used for examining the business
operations from the variety of perspective for determining the ways that can be used to strengthen the
business and understating the greater financial condition or situation. The process scan the financial
statement to evaluate the relationship the disclosed items. In other words, the analysis keep focusing on
the past performance evaluation in terms of profitability, liquidity, growth potentiality and operational
efficiency. The analysis of the financial statement involves the methods use in interpreting and assessing
the outcome of the current and past financial position or performance since they associate to particular
interest factors in investment decisions. Thus, the analysis of the financial statement is important mode
of assessing the past performance as well as planning and forecasting the future performance.

Elements Assessed By Jaguar Land Rover Plc Bond Valuation Financial Analysts:

The elements are listed below;

Profitability:the financial analyst generally assess profitability of an organization since it is the ability
allow organization sustaining growth and earing income in both long term and short term. A degree of
profitability of an organization highly depends on the income statement reporting on the operations
results of company.

Solvency:it is the ability of an organization paying off its liabilities or obligations to third parties or
creditors in long term. The solvency depends upon the balance sheet of company indicating the
company’s financial condition at a given period of time.

Liquidity: it is the ability of an organization satisfying immediate obligations, maintaining positive cash
flows and it most likely based on the balance sheet of company depicting the financial condition of
organization.

Stability:the ability or an organization to remain in the business for the longerperiod of time without
sustaining significant losses while conducting the business operations. By assessing the stability of the
company needs use of balance sheet and income statement as well as non-financial and financial
indicators.

Users of Jaguar Land Rover Plc Bond Valuation Financial Statement Analysis

The users of the financial statement are listed below;

Management:the controller of the company most likely prepares the ongoing analysis of the financial
results of companyin relation to the unseen operational matrices by outside entities.
Investors: both prospective and current investors tends to examine the financialstatements for leading
the ability of company to continue generating cash flows, issuing dividends and growing at historical
rate.

Creditors:one who has landed funds to the organization likely show his interest in its ability paying back
the debt, thus keep focusing on measures of cash flows.

Types of Jaguar Land Rover Plc Bond Valuation Financial Analysis

Financial ratios:

Significantly, creating the financial ratio add meanings to the accounting and financial data of the
business. Therefore, being the use of the financial ratios would provide assistance thereby leading to the
overloaded information. Theratios are sub-divided into the major groups that tend to cover the financial
areas.

Sales:

The sales amount of an organization depicts the business size. The sales implications for the selling and
purchasing power, economies of scale and amount of market share. The % change in sales invocates
that how rapidly or quickly the sales has been growing over the period of time, thus leading to answer
the question regarding growth in relation in competitors and general economy.

Profitability:

It is significantlyimportant for companies measuring profit in context, for example; if it is stated that the
company has generated 10% profit returns and did not ensure the provision of profitability-oriented
information but in case if the company had make a 10% gross profit or return on equity, then the profit
term would give meaning. The ration lay under profitability are discussed below;

Return on assets (ROA): it is one of the most commonly and widely used performance measure of an
organization. The return on equity likely measures the profit amount that had generated by assets. It is
used with the intent of analyzing that how well an organization have put their assets to work comparing
to other competitors.

Return on equity (ROE): This performance measuring parameter measures the return that the company
has earned in relation on the owner funds. The matric can be adjusted for thepurpose of reflecting the
average equity amount being employed during the span of year, giving the more accurate and
realisticpicture of how the organizationhas been performing throughout the year.
Gross profit margin (GPM):it is also referred to operating profit margin. It is most common use with the
objective of assessing the business model and financial health of company through revealing the
remaining portion of money from revenues after deducting cost of goods sold.

Operating return on total assets (ORTA): this matric most commonly provides better way of looking at
the ability of the organization to generate profit returns from the principle or core activities since it does
not involves other expenses including interest expenses not it includes marketable securities income,
interest income or onetime extraordinary transaction.

Asset Management – Jaguar Land Rover Plc Bond Valuation

The ratios under asset management includes current asset turnover, day’s receivable, days of inventory
and inventory turnover.

Asset turnover: this measure is widely used in order to measure the ability of the company in
generating sales from the fixed assets. Not only this, it also indicates that an organization has a lot
unproductive assets for instance inventory, receivables, equipment and plant for its current sales’ level.

Fixed assets turnover: it is supposed to be vulnerable to the asset valuation issue. It is most important
ratio in companies which are capital intensive. It is comparatively low importance for the companies
with minimum need for capitals such as leased retail operations and wholesale distribution. In case an
organizationis decreasing fixed asset turnover so it means that the production has been running at lower
than capacity.

Current asset turnover:it measures the current asset level that is require for supporting sales.

Day’s receivables: it is the measure of how long will it takes for an organization collecting bills owing to
it. The collection time is measured by days receivables on credit sales.With increasing day’s receivable,
the company would need more working capital. The credit policy of an organization last greater impact
on the day’s receivables. It is important to note there that it also highlights the needs to beaware of
keep emphasizing on the company’s specific concerns without appreciate secondary influence on other
ratios.

Days of inventory: it is the indication of how the company efficiently managing inventory. The inventory
amount can be monitored by analyzing day’s inventory ratio.
Jaguar Land Rover Plc Bond Valuation Financial Structure

Financial leverage multiplier: it is the connection between return on equity and return on assets of an
organization. It provides the way of looking at the relative equity and debt amount that has been using
by company in order to finance the assets.

Current debt to equity ratio: it is the mix if the debt of an organization. In case of high current debt to
equity ratio, it means that the company would be in problematic situation while paying its bills.

Equity turnover: in case of high debt to equity ratio, it might because of the too little equity or too much
debt burden on an organization. In case of high equity turnover ratio, indicating that the shareholders
have efficiently used equity.

DuPont’s Jaguar Land Rover Plc Bond Valuation Profitability Model

It is considered as the best model as it does not reveal anything regarding the liquidity of an
organization. Also it likely reveals about the organization’s expense. One of the unavoidable advantage
of this model is thatit has begun establishing benchmarks – across companies and over the period of
time which can be used for flagging the potential issues areas where more than one ratios are reflecting
the key problem or issue.

Trend or Percentage Analysis

The useful snap shot can be taken by analyzing the financial condition of an organization in a particular
time period. Also, there are many questions that can be bets answered by comparing the figures in
Jaguar Land Rover Plc Bond Valuation percentages. For instance; which are the areas of company getting
stronger or weaker? Which areas are in need of immense attention? Etc. for the purpose of answering
these type of question, it is important for organization recasting the financial statement in to the
percentage terms. The major advantage is that it enables the significant comparison between time
periods. There percentages are most likely providing analysts or managers with the fast or rapid way for
finding key issues or problems. Additionally, the attention can be paid to certain weakness and strengths
through seeing the appropriate changes over the period of time.

After considering the major top problems, the business analysts or managers would then be able
maximizing the shareholder’s wealth.

Comparative Jaguar Land Rover Plc Bond Valuation Analysis

The evaluation of the performance of company is often easier in case of having benchmark or standard
performance for the comparison. The suitable benchmark can be found with some problems such as
unique attributes problem and averages problem etc. it is not appropriate setting an average as an
objective. An upper performance quantile can be the most appropriate performance standard (D’Aveni,
2007)

Operational Jaguar Land Rover Plc Bond Valuation analysis

The Jaguar Land Rover Plc Bond Valuation assessment of the operational efficiency in the initial stage as
a whole for business or any of the business sub-division is likely performed through a percentage
analysis of income statement. Individual expenses or cost items are associating to gross sales revenue
adjusted for all allowances and returns. The sales’ common base permitting a ready comparison
between key expenses from time to time against industry databases and competitors in the market over
longer stretches of time

Cost of goods sold and gross margin analysis: in operational analysis the most commonly used ratios
involves the calculation of the cost of sales as a percentage of sales. The ratio depicts that the
magnitude of the cost of services provided or cost of good manufactured or purchased in relation to
gross profit or gross margin left over for operating profit and expenses. It is noteworthy that the gross
margin reflect the relationship of volume, price and cost. A change in the gross margin might derived
from the combination of the changes in the product’s selling price, manufacturing cost level for the
product and the variation in the business’s product mix.

Contribution analysis: this analysis is mainly used for the internal organization’s management, even
though it is increasingly applied in broader analysis of financials, it includes relating sales to the
individual product group’sor total business contribution margin. Such type of calculation needs very
selective estimate or analysis of the variables and fixed cost or expenses of the company while taking
into consideration the operating leverage effect.

Jaguar Land Rover Plc Bond Valuation Market Indicators

There are two equally important ratios used as indicators of the values of stock market.

the simple relationship between current stock market price and expected or current earnings per share
is often quoted by both owners and management. The earnings multiplier ratiois considered as a broad
indicator of how the earnings performance and prospects of organization is judged by the stock market.
The straightforward calculation related the common share current market price to the most recent
available EPS on the yearly basis.
Relative movements in price: targeting for the purpose of creating the shareholder value depends on
the relative performance of price. The movement in price are likely expressed in mentioned ratios and
absolute dollar terms. While the typical investor shows their greater interest in absolute change in
shares value, the insights from the stock performance to the appropriate average and to the market for
some industries are supposed to be helpful to assess the company’s particular trend (Rappaport, 2010).

Value drivers: in recent time, the approach that has been significantly gaining the increased recognition
is identifying the key elements standing out as vital in shareholders value creation of the specific
organization. From the standpoint of owners, the key value drivers may be the growth potential
company’s key services and products, key technology capabilities providing the competitive edge,
superior process’s cost effectiveness as well as the strategic differentiated positioning. Combining all of
these lasting inevitable impact on the expectations of market regarding the cash flow generation and
future success of the company.

Value of firm:this is the most common concept recognizing the components of capital structure of an
organization debt and equity are tends to be values separately in the market. The formula for calculating
the value of firm is showing value of the shares of company is the function of the firm’s total value less
debt value (Harms, 2015).

Conclusion

By having a closer look over the matrices used for financial analysis, it is to say that the financial
statements holds notable importance because it evaluates the management performance, plans and
corporate strategy for future.

In addition, the financial analysis helps companies in making the more informed decisions for the firm.
The underlying objective of the financial analysis is organizing the financial statement as well as other
accounting data of an organization enabling the comparisons with other companies, also enabling to
accurately evaluate raw data. In short, it provides the basis to company’s executive, analysts and
manager of making the company profitable in forthcoming years (Helfert, 2017).

Alternatives

The particular section deals with the different ways the problem can be resolved. In particular section,
the management/teams develops different options through which the problem can be resolved. Many
times these options are already in hand with the management or re-developed from the scratch through
strong brain storming.
In typical situation, there are three options that are developed in by the organization to deal with the
given problem. The options developed entails and includes the maximum factor that the organization
should analyze or achieve, thus offering great value.

While developing The Alternative, the following factor are taken in account, in order to develop the best
alternative that may resolve the problem effectively.

These factor includes the consideration of the following:

Cost

Reliability

Invulnerability

Merit

Simplicity

Compatibility

Reversibility

Robustness

Stability

Riskiness

Jaguar Land Rover Plc Bond Valuation Cost:

The cost includes if the option proposed is cost effective or can be afforded easily by the company
without effecting the overall profitability and other operations of the company. The consideration of
cost is important in the alternative generation in order to attain the maximum feasibility with overall
business strategy and the budget allocated.

Reliability

The reliability factor includes if the option developed is successful or has the successful track record in
the past or with the pats companies. Such is important to analyze or else it would lead to failure.

Invulnerability

The Invulnerability of the option is also analyzed, in order to understand the sustainability of the option
if the one part factor is missing so to understand the suitability of the option.
Merit

The merit factor, outlines if the option really resolving the issue or aligned with the given situation.

Simplicity

The simplicity factor analyses if the option proposed is easy to implement. Because adopting or
proposing an alternative that is difficult to implement or takes a lot of resources with no definite
outcomes is vain.

Compatibility

In addition, the compatibility of the option is also analyzed, in order to understand if the given option is
aligned and compatible with the procedures of the organization. Such factor analysis is important in
order to avoid any resistance implementation and also save the resources and efforts.

Reversibility

Among the above factors, the reversibility factor carries high importance. It is due to the fact that the
organization needs to analyze exact factor in terms of its reversibility to see, if the process can be
reversed, if the option fails to offer the respective results.

Stability

The ability of the option is considered while the alternative generation process, so gauge if the option
will remains table, if the given situation and markets changes. And will it make the organization
sustained in the changing market situation.

Robustness

The robustness of the option also needs to be analyzed. It is due to the fact that such analysis allow the
organization to see, if the option will remain strong in future or not.

Apart from this while developing the option, it is important to consider the realistic nature of the option.
The option has to be realistic and should have imperative results on the organization. The realistic and
SMART nature of the option is important to be considered and developed, so it offer maximum value
and also resolves the problem effectively.
Lastly, while developing the options/alternatives, it is important to consider the nonrealistic factors that
may make the alternatives complicated, leading to poor implementation, time consumption and other
related issues. Hence, it is suggested, that while developing the alternatives, it is important to consider
the realistic and smart nature of options along with the avoidance of developing such issues that are
not offering the right solution or the suggesting such options that are of no use to the organization.

Jaguar Land Rover Plc Bond Valuation Evaluation of Alternatives

Alternative are the different ways of achieving a same end goal through two or more different methods.
It is not a close substitute of a first define choice or other alternatives or must provide the solution of
the problem in a particular way. For instance, lower price, special offer, and money back guarantee etc.
are all the different ways for achieving the same objective that increased sales. Alternatives are
generally mutually exclusive in a way that if we combine two or more alternatives together it will
eventually create a new alternative.

They are the Jaguar Land Rover Plc Bond Valuation technical and economically ways through which the
project can be carried out feasibly. It is encouraged to be consider especially for a projects that are large
and complex in nature

Under the evaluation of alternatives the pros and cons of the alternatives developed above are gauged
based on the benefits they offer to the organization and also the strengths the carry that may help the
oragnation in overcoming the problem. In addition to this, the disadvantages of the alternatives entails
the costs that are associated with implanting the option, and thus required to be considered before the
implementation process, in order to avoid any mishap in future or during the implementation.

Under the Cost/benefit analysis of the alternatives, different factors such as cots, competitive edge,
market share, financial feasibility and human resource required are considered to be the major factors
of implementation. In addition to this, the careful and deep consideration is given to the political,
economic, social and other porter 5 forces and pestel model so to understand the alignment of right
alternative with maximum value and weightage in resolving the problem.

Moreover, under the particular section, the decision criteria is also developed. The particular decision
criteria incorporates all the factors that the company aims to archives. Such factors may include sales,
profitability competitive edge, market share and other. Once it is done, each alternate is compared
against each other and with the decision criteria develop, and are given different weigtage. These
weigtage are given based on most favorable to least favorable, and the option with most rating s
ultimately selected.
Also, during the evaluation process, the financial feasibility of the organization is also considered and
the drawbacks/weaknesses of the organization. This is important as it allows the organization in meeting
the ultimate goals and addressing the problem effectively.

Lastly, while doing the evaluation of Jaguar Land Rover Plc Bond Valuation alternatives, it is important to
quantify the options through different techniques. Though in many cases, it is difficult to analyze the
feasibility of the options especially the intangible factor, however, quantifying the maximum option is
important, in order to develop a clear image and understanding of option that will address the problem.

Also, while selecting a particular course of action/alternative, it is important to ask” whether the option
will resolve the problem directly, or will an additional efforts will be required to address the problem. In
Addition it is also needed to be considered, if the given option or the alternatives have the right
alignment with the organization and re offering value.

Perhaps, it is important to involve other members to take the active feedback on the alternatives, in
order to gauge the value of the alternatives and the value it may offer to the organization in the long-
term. The open discussion and review from past enables to see more clear picture of the ultimate
outcomes, leading to better implementation and selection of the right alternative.

Jaguar Land Rover Plc Bond Valuation – Recommendation

Once the options are developed and evaluated, the recommendation is made, on the basis of the best
suited option that offers the maximum value to the company and address the problem succinctly. The
recommendation is mad in away, that not only offers the solution the problem, but also depicts the
implementation process and the course of action that the organization needs to take in order to be
successful.

A strong Jaguar Land Rover Plc Bond Valuation recommendation must cover the key areas as how the
organization will implement the alternatives, what benefits will it receive if it implement the when
alternatives and what could be the cost, that he organization will need to overcome or address, in order
to effectively implement the alternatives.

In addition to this, once the alternative is selected, the recommendation needs to entail what change it
will bring to the organization like the 20 % increase in the Jaguar Land Rover Plc Bond Valuation sales or
profits or the sustainability or increases in market share. These factors are important to be mentioned in
the recommendation, in order to make itr strong and firm and allow the stakeholders/reader to connect
the problem and solution, leading to better understanding.
Moreover, the recommendation also needs to entail the plan B, that if for instance the results are not
generated as per the plan, the second set of recommendation must be incorporated in the plan, in order
to allow the organization to quickly shift to the plan B, in order to avoid the losses and sustain the
presence of the company in the market.

Lastly, under the recommendation, it is important to incorporate the finding from the past, so to make
the given Solution more acceptable. A good recommendation is that, incorporates the findings from the
past. This is important, as it allows the reader and stakeholders to understand the proven facts, and the
pasts results such recommendation has harvested, leading to more acceptability and also the
determination of the plan that may be in need to be adopted so to avoid the delays and resistance in
the organization, while implementing the change.

Infact, the set of recommendation offered should also have a contingency plan, and the other course of
action for plan A and B both. This makes recommendation more firma and acceptable.

All in all, the recommendation include, what, why, how and whom factors. Thus is important as to allow
the organization. Shareholders to clearly understand what is required to done, how it is required to do,
who are the key player and how it will be implemented. In addition time required has to be mentioned.
This allows the stakeholder to understand and determine the time and resources required to implement
the plan effectively (Turner, 2012).

Harvard Case Solution

Time Value of Money: The Buy Versus Rent Decision – Case Solution

In the case study, a recent MBA graduate had been renting an apartment while a similar flat had been
listed for sale. The graduate is now facing the typical buy or rent decision. Hence the grad decided to
apply some of her analytical tools acquired in business school to make this decision for her personal life.

SEAN CLEARY, STEPHEN R. FOERSTER

IVEY (W14403-PDF-ENG)

AUGUST 28, 2014

Case questions answered:

Calculate the best route for the graduate’s housing situation, developing your understanding of the time
value of money (TVM) concepts and calculations. Describe your assumptions, methodology, and results
in your discussion narrative, and attach a simple spreadsheet supporting your analysis.

NOT THE QUESTIONS YOU WERE LOOKING FOR? CLICK HERE.

Case answers for Time Value of Money: The Buy Versus Rent Decision

Excel calculations

This case solution includes an Excel file with calculations.

Excerpt of included Excel calculations

In scenario 1 (see included spreadsheet), it is assumed that Rebecca Young, rents the condo and
continues to invest the $122,000. The FV of the investment at year 2 is $131,955, at year 5 is $148,432
and year 10 is $ 180,590 given that the interest rate is 4% annually. After deducting the net cash outflow
for rent (# of months x $3,000) for each time period, the net gain on the investment (net FV of the
investment) at these periods is as follows: $59,955, -$31,568 and -$179,410. Clearly, after 2 years it is no
longer economically reasonable to rent the unit.

In Scenario 2 (see attached spreadsheet), it is assumed that she purchases the condo for $600,000 and
uses the $122,000 for a down-payment and associated closing costs. She takes out a mortgage for
$480,000 amortized over 25 years with an APR of 4%. In this case, her monthly mortgage payments are
$2560.48. From the amortization table, it can be seen that her ending balance on the loan at year 2, 5
and 10 are respectively $456,487.49, $417,572.87 and $341,620.73. Assuming the following scenarios:

1. Condo price remains unchanged: When she sells the unit, after paying back her mortgage and
associated costs, her net gain on her initial investment will be $77,793 at year 2, $66,127 at year 5 and
$57,779 at year 10. This is a better choice compared to renting.

2. Condo prices drop 10% over next 2 years, back to original price at year 5 and increases by 10% at year
10: When she sells the unit, after paying back her mortgage and associated costs, her net gain on her
initial investment will be $20,793 at year 2, $66,127 at year 5 and $114,779 at year 10. This is still a
better choice compared to renting although her investment, in this case, will be worth significantly more
by the end of year 10.
TIME VALUE OF MONEY: THE BUY VERSUS RENT DECISION Case Solution

Analysis

Opportunity cost and payment

If Rebecca pursues to purchase the condominium, it would require her to pay the amount around
$124,000 exclusive of taxes and other operational costsassociated with transactions.However, if the
same amountis invested in some other activity like bonds or something like that, it would give her the
return of $406 monthly. But the option would require her to put down the interest of purchasing a new
condominium.

Also, it is also analyzed that acquiring a new Condominium would incur the additional cost in future due
to certainchange in policies or political scenario of the country that might affect the interest and
taxesrates. Insuchcondition, Rebecca ha so pay an enormous amount of $ 1811, including condo Fees,
Property taxes, Repair, opportunity cost and Maintenance.

Mortgage Acquisition

If Rebecca chooses to purchase the condominium at the cost of $ 600,000, at the rate of 4% annually.
This will open a gateway for Rebecca to acquire the mortgage and buy the new condominium with the
payment for next 25 years.Also, if Rebecca chooses to acquire the mortgageloan, it will incur her
additional cost of $2533 monthly. Moreover, she alsohave to pay the down payment of 20% along with
the Principal amount of $ 120,000.lastly, she also has to pay the closing fees property tax and monthly
taxes, which will combine and make the amount of $1400 monthly.

Situational Analysis

There are four scenarios presented to Rebecca’sundercertain conditions. (1) If the price of condominium
remains unchanged than Rebecca will not incur any gain or loss however, if the price of the
condominium increase by 10%, than Rebecca will gain $60000 with the market inflation rate of 2% for
net 10 years that will offer a gross gain of $ 131397.But if the prices raise by 5% than she will get the
gross profit of $377,366 as a return.

Discussion
The case represents multiple options available to Rebecca for utilizing her money according to time
value of money. IfRebecca opts for purchasing the condominium, it will require her to pay the down
payment, along with closing fees. However, ifshe continues to liv in the rented condominium,she
requires to pay the $ 3000 monthly only. But of se go to opt for option 1, which is acquiring the
mortgage loan, she would have to pay the amount of $ 4345 including all taxes and additional cost,
which is higher amount than the oneshe is paying in the form of rent.

But it is alsoimportant to analyze that rent is also a form of liability that will not transfer the ownership
to Rebecca name, and it will not give her anything in had t the day end. Which will give rise to the
concept of time value of money. Though acquiring the mortgageloan will requireRebeca to pay an
additional amount, but at the day end, the will get the ownership of the condominium, which is the
effective utilization of money. Though acquiring loan and rent are both liability, but one labiality offers
the ownership at the day end which is termed as limited liability. Also, if she invests in any other activity,
it will give her the return of $ 406 that will only offset the inflation cost for her in return n future, thus
not offering any ample amount ofopportunity to Rebecca.

However, acquiring theloan would not be easy in terms of payment since one payment requires her to
pay ahigh amount inclusive of principal payment and transactionfees. But it is an opportunity, since
there arechancesthat the price ofland will increase in future, and that of the financial position of
Rebecca in next 10 years, that will ease up the payments nada so offer a valuable asset in return.

Recommendation and Conclusion

Theoption of acquiring the mortgageloanis bestfor Rebecca, as it will offer her the ownership of the land
at the day end in the next 25 years. Though the option is costlier in present time, yet it will offer her
great returnsin future. Since rent is an unlimited liability, so even if Rebecca lives for 50 yearsin the
rented house, it will not offer her anything in return, making themoney go is vain. Also, if she invests in
other investment activities, the return will not tradeoff with the future results of acquiring an ownership
of land.And since it is also depicted that the price of land will appreciate, it is right time for Rebecca to
acquirethe mortgage and the ownership of landin next 25 years........................................

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