International Research Journal of Applied Finance (IRJAF)

(ISSN 2229-6891)Since 2010

Lease or Buy Decision Analysis: Apollo Manufacturing Corporation Case Study
Ronald Richter    and Arthur S. Guarino* (Rutgers University, USA)
Leasing allows a business flexibility in different ways. Whether it means lower transaction costs for leasing equipment as opposed to purchasing, reducing uncertainty regarding an asset’s residual value, or having fewer restrictive covenants than borrowing. However, there are also potential problems involved in leasing such as higher overall costs, not owning the asset, and maintenance costs the lessee incurs in case the asset breaks down. This case study examines the quantitative analysis a company’s managers must perform in order to best determine whether an asset should be purchased or leased given certain financial considerations and factors.

Indexed Annuity Case Study: An Analysis of Growth and Income Return
Kim W. Ng and Arthur S. Guarino* (Rutgers University, USA)

This case study deals with the comparison of the return of an indexed annuity versus that of an index exchange traded fund (ETF). The case study takes into consideration the unique features of the indexed annuity such as a cap on monthly returns, a floor of annual returns, historical monthly prices, and dividend payments for the ETF. The case study also deals with a quantitative analysis of such aspects as the monthly returns, participation rate, average monthly return for the ETF as well as average annual return, compounded return, and examining the various alternative investment options available to the client.

Dark Side of Distribution Policies: Venezuelan Hyperinflation Crisis
Hoje Jo, Lauren Tauriac, and Loren Fan, Santa Clara University, USA

Venezuela, once used to be one of the richest nations in South America, is now under the brink of total economic collapse and potential country moratorium. The purpose of this paper is to examine the basic causes and consequences of Venezuela’s socialist distribution policies, and how they have affected the countries outstanding excessive debt, extreme hyperinflation, currency crisis, deteriorated productivity, and high unemployment rate over the course of the last few decades. We maintain that without initiating sustainable innovation, inventiveness, and risk-taking for economic development and growth, socialist distribution policies coupled with authoritarian and government corruptions are destined to fail, leading to economic crisis. Consistent with this assertion, Venezuela’s socialist-driven distribution policies not only leads to excessive hyperinflation and substantial economic downturn, but also more serious humanitarian crisis including climbing hunger, disease, crime, death rates, and massive emigration from the country.