Introductory Modeling Harvard Case Solution & Analysis

Introductory Modeling Case Study Solution

Explanation:

If the value of the property doubles every 10 years, and the owner goes to sell it 20 years after the acquisition date;it will not give any financial benefit because the owner cannot afford to service the loan as he found thatduring the term of the loan, he could not make sufficient debt payments for three or more consecutive months. This is why, he decided to continue renting and invest his available savings (and future net available cash) into an index fund that has a capital growth rate of 10 percent per year effective (compounded monthly), and will generate the financial benefit of4,115,021 United States Dollars.

Best Practice Principle that are not Incorporated in the Model:

The best practice principle that I have not incorporated in the model, are correctly identified, which are:

1. the color coding to distinguish the between input and formulas
2. the cell comment function has not been used to describe the calculations and assumptions that need to be explained in the model
3. the error check function has not been built to ensure the balances
4. I have also linked the cells with other excel sheets

Benefits Gained by this Best Practice Principle:

The benefits associated with this best practice principle is that, as it is a known fact that if the owner goes to sell the property 20 years after the acquisition date; it will not give any financial benefit to him, so he should take loan and invest this money for purchasing some other assets, such as the investment in stock exchange, bond etc. which will lead towards gaining some amount for the family from whom they might take the property after some years, without having any loss incurrence or becoming adefaulter............................

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