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FINM1416 Workshop 1 Assignment

This is a group assignment be completed in groups (4 or 5 students) during and after your workshop.

Important:

§ You must have read this task sheet before taking part in the Group Workshop.

§ Attending the workshop is highly recommended as you will form groups during the workshop. If you are unable to attend the workshop, you will be randomly put into groups.

§ Attending workshop is important as we will cover a relevant case study and answer any questions you may have with this group assignment.

This group assignment accounts for 15% of the course assessment, and will be due 1pm, 24 April 2026.

After submitting your group component work, you are required to complete the Peer Assessment (Buddycheck) individually on Blackboard to evaluate the level of contributions in various aspects made by your group peers. The Peer Assessment implies that not everyone in the same group will have the same mark. The due date for the Peer Assessment 1pm, 1 May 2026. 

Group Formation

How groups are formed

· During the workshop you will self-enrol into a group on Blackboard (Workshop Groups).

· Groups must have 4–5 members.

· You may join any group that has vacant places on Blackboard/Groups section.

· Before leaving the workshop:

o Ensure all team members have enrolled in the same group on Blackboard.

o Discuss contact details, responsibilities, and meeting schedules.

o Ensure everyone understands the peer assessment criteria.

Students not attending the workshop

· You will be randomly assigned to a group. Historically the group collaboration in those groups has not been efficient.

· If you attend and forget to self-enrol, you will be automatically assigned to a random group.

Preparation

The purpose of this workshop assignment is to complete a Buy vs. Rent analysis. Make sure that you must have completed Modules 3 and 4, Tutorials 3 and 4, and Lecture 3 before attempting this assignment. Failing to do this will likely cause confusion and delay your progress in this assignment.

Problem

Amy has recently accepted a new job offer as a senior research scientist at UQ (St Lucia campus). She moved to Brisbane a few weeks ago and is now considering whether to rent or buy a property in a neighbourhood close to her work. After undertaking several property inspections and independent research, Amy has now found a feasible option that suits her work schedule, lifestyle, and preferences.

1) Buying: A 2-bedroom unit in St Lucia built 10 years ago that takes about 15 15-minute walk to the UQ campus. Despite a strict body corporate requiring permission for pets or major alterations, the unit already has water-saving devices installed and is eligible for rooftop solar panel installation – an option that Amy values greatly. If she buys this property, it will be her first home ever.

§ Property cost: $1,100,000 (Offers over $970,000, but she thinks she can get it for $1,100,000)

§ Other costs when buying the property: Legal fees ($1,500), deed transfer tax (@3% of property value), solar panels installation ($6,500).

§ Ongoing costs: Repairs and maintenance fees (+$200/month), council fees (+$120/month), sewage and water (+50/month), body corporate fees (+$350/month). Estimated cost savings from the rooftop solar panel is $150/month.

§ Selling in 10 years: Amy plans to sell the townhouse for $1,750,000 in 10 years. She also expects to pay off her mortgage at that time. She estimates that the selling fee she will have to pay to the real estate agent is 2.5% of the selling price.

§ Benefits: Within a short walking distance to UQ campus and close to Toowong shopping centre, easy access to public transport (UQ Lakes and Chancellor bus stops, Guyatt ferry station, etc.) to CBD and other suburbs, rooftop solar panels installation option.

Having worked for many years, she now has a substantial amount of savings that will allow her to make a deposit of 22% of the purchase price. She will pay any other initial expenses from her own pocket.

2) Renting. If she does not buy the house, she will continue to stay at a place she is temporarily renting now – a house in Kangaroo Point, which is very close to Brisbane CBD but further out from UQ campus. She would commute to UQ using public transport most of the days, costing her $1,200 a year. The rent is $2,600 per month for this 2-bedroom house. The landlord has promised not to increase it until Amy leaves.

Interest rates

Amy has found two local lenders in Brisbane:

§ Queensland Country Bank (https://www.queenslandcountry.bank/ )

§ Westpac (https://www.westpac.com.au/ )

Assume that current rates will apply going forward. Use a 30-year loan and 3-year standard fixed rates (use rates on 3 April 2026) to calculate monthly payments. Assume that rates are compounded monthly, and Amy can save at the same rate as she can borrow. Some banks offer more competitive interest rates if you are enrolled in an annual package. You need to make judgements about whether such annual package is beneficial and hence what interest rates you should use.

Required:

In preparation for your assessment, make sure you evaluate the two buy or rent options for both banks. Also, think about how you would decide what option you would choose based on financial factors and what non-financial factors you would consider in your final decision.

Task 1

Use the “Workshop 1 – Buy vs Rent Template” Excel spreadsheet on Blackboard and fill out all cells in yellow. Try to use as many formulas as possible. Guidance for certain cells is provided through comments in the Excel file.

Task 2

Prepare a group report (up to 800 words in total) to cover the following points:

a. Rank the options using solely financial criteria. Make sure you explain both the theory behind your rankings and provide the necessary computations (attach the completed Excel file from Task 1 in a separate file)

b. In completing Task 1, are there any disagreements among group members regarding the APR for Queensland Country Bank and Westpac, the monthly payments and the PV calculation for both buy and rent options? How did you resolve them? (if there are no differences identified, list what was the most challenging about this exercise and why)

c. What are the most important non-financial factors that are considered by members of your team, for both lender and Buy vs. Rent, and why? Outline any differences you encountered and whether views have been influenced by other team members.

d. Describe which option each member would choose, explain which criteria was most important in the decision.

The non-financial criteria mentioned in the essay are to come from your general knowledge. The idea is to acknowledge that money is not the only factor in making this type of decision. We are looking for how you think about decision-making. There is no single correct answer – anything that would impact your decision is fine, provided you can reasonably argue that your selected criteria are relevant to the choice of a particular buy or rent option, and it is non-financial.

See the marking rubric posted on Blackboard for a breakdown of marks.

Marking

Your final score for the workshop will be computed out of 100 marks. Marks will be allocated as follows: