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Financial Management – Final

You have been asked by your 59 year old father-in-law Felix to help him assess a new venture.

It is Friday night, and he needs the work finished by Sunday, in preparation for an early Monday

morning meeting, so you know that he will not be able to give you any more information than

he already has (and you will be unable to contact him over the weekend), and therefore you

should rely on your own assumptions and estimates for some of the analysis if necessary.

Felix, who was educated in London, now lives in Zurich, Switzerland, and recently took early

retirement (from a chocolate firm he joined 25 years ago), leaving the company with a lump sum

(after tax) payment of CHF 900,000. Surprisingly, rather than being depressed by his new state

of independence, he is excitedly contemplating a new career as a retailer of natural pearls. He is

confident that he can set up a business to import pearls from Tahiti and sell them in Zurich. His

wife, who he met at business school, is pleased with his passion for this possible new venture

but concerned that it might turn into