Money & Banking - Assignment Example

The name ‘Exeter’ will be more appreciated since it relates the business to the locality. In the instance that the success probability of the fish restaurant is higher than that of its failure, I would recommend that the sandwich restaurant is started instead. This is because in light of the discrepancy of the earnings, the partnership will still stand to gain from McExe. The fish restaurant Exeter is yet to break even as such, the viability of the business is pegged on an improvement of the marketing strategy; the 4 Ps of marketing.

Without that the Bank’s proposal for the sandwich restaurant McExe seems to be the better option. In this instance I would recommend that the option since it is more viable than the previous two be given priority over the other two. It stands to profit them more than the fish and sandwich restaurant proposals. The Sushi restaurant should be owned by the Chef X since he has more earnings and as such stands as the ‘majority shareholder’. Consumption planning by the model (considering that a short term investment at date 1 is not available) they should focus on the model which has a higher return and so short term investment at date 0 with a return of r1 = 1 at date 1.

This therefore, is the best model to use since it guarantees you a100% of earnings in the business. If I chose a long term investment today over a short term investment at date 0 (Yesterday) returns will be lower but being a long term investment, you can persist and hope for more gains in the future. This is because business is about risks; we risk to get a returns (Hellwig) Obviously if r2 is low at the moment agents will not invest it at date one because it is not promising. It will scare potential investors who agents are targeting to invest later.

It will be a loss making investment to agents. They will not be exposed to fractuation in interst rates which can be brought by inflation,