Starting Right Corp.
Company Background:
Starting Right Company * Inspired by a movie, Julia Day decided to build a baby food company named as Starting Right Company, which targets the upper class market. * To differentiate the product from its competitors, the company offers frozen baby foods with no preservatives while ensuring great taste. * Julia Day hired people with experience in finance, marketing and production. The group started to develop product samples of the new frozen baby food. * Julia decided that each investment should be in blocks of $30,000. In addition, to become an eligible investor, one should have an annual income of at least $40,000 and net worth of $100,000.
Definition of the Problem:
The case presents six (6) independent questions requiring investment-related recommendations based on specific situations presented.
Case Facts and Information:
To help raise funds for the company, Starting Right Corp. is offering three (3) investment options, the specifics of which are stated below:
* Corporate bonds with a return of 13% per year for the next five (5) years and a further guarantee of at least $ 20,000.00 back at the end of the five (5) years.
*The computation of the returns for corporate bonds is assumed to be for simple interest since it is not stated to be compounded annually. * Preferred stock – Initial investment increases by a factor of four (4) in a good market and only half of it in an unfavorable one. * Common stock - Initial investment increases by a factor of eight (8) in a good market but loses all its value in an unfavorable one.
Julia has also decided that investments made should be in blocks of $ 30,000.00.
The eligibility factors required from prospective investors are also stated which includes an annual income of at least $40,000 and net worth of $100,000. An inflation rate of 4.5% per year is stated as well. These data however were not used in deriving recommendations for the corresponding
Starting Right Company * Inspired by a movie, Julia Day decided to build a baby food company named as Starting Right Company, which targets the upper class market. * To differentiate the product from its competitors, the company offers frozen baby foods with no preservatives while ensuring great taste. * Julia Day hired people with experience in finance, marketing and production. The group started to develop product samples of the new frozen baby food. * Julia decided that each investment should be in blocks of $30,000. In addition, to become an eligible investor, one should have an annual income of at least $40,000 and net worth of $100,000.
Definition of the Problem:
The case presents six (6) independent questions requiring investment-related recommendations based on specific situations presented.
Case Facts and Information:
To help raise funds for the company, Starting Right Corp. is offering three (3) investment options, the specifics of which are stated below:
* Corporate bonds with a return of 13% per year for the next five (5) years and a further guarantee of at least $ 20,000.00 back at the end of the five (5) years.
*The computation of the returns for corporate bonds is assumed to be for simple interest since it is not stated to be compounded annually. * Preferred stock – Initial investment increases by a factor of four (4) in a good market and only half of it in an unfavorable one. * Common stock - Initial investment increases by a factor of eight (8) in a good market but loses all its value in an unfavorable one.
Julia has also decided that investments made should be in blocks of $ 30,000.00.
The eligibility factors required from prospective investors are also stated which includes an annual income of at least $40,000 and net worth of $100,000. An inflation rate of 4.5% per year is stated as well. These data however were not used in deriving recommendations for the corresponding