Critical Evaluation of Shared Equity Program - 1925 Words

Critical Evaluation of Shared Equity Program (Term Paper Sample) Content: University    Critical Evaluation of Shared Equity Program By    Studentà ¢Ã¢â€š ¬Ã¢â€ž ¢s Name    Date of Submission    Instructor Critical Evaluation of Shared Equity Program Introduction The various levels of government have critical roles to play in ensuring that citizens, especially the young people, have access to affordable housing. Previous evaluation has shown that the current First Homeowners Scheme has been ineffective in helping the young people acquire affordable homes (Eslake, 2013). As shown before, New South Wales (NSW) has seen a decline in homeownership by young people over the years (Yates, Kendig and Phillips, 2008). There is a need to reverse this trend through replacement of First Homeowners Scheme with a new policy that will see to it that more young people have access to affordable housing in the state. The shared-equity ownership policy is currently in force in the United States and has been instrumental in helping low-income earners in the country acquire new homes (Davis, 2006). This paper evaluates the possibility of implementing the policy in NSW to help young people gain access to affordable homes. As the state adopts the shared equity pro gram, it will have to utilise the funds for other schemes that are currently in operation. This means that the existing programs will have to be abandoned to give way for shared equity homeownership scheme. The Statement of Benefits There are a number of specific benefits that the residents of NSW and the state government stand to gain from the implementation of the shared-equity ownership. Despite the existence of variations in the structures of the different shared-equity programs, there are three common features that characterise them (Lubell, 2013). The different shared-equity programs have emphasis on owner occupancy, perpetual affordability, and sharing of equity. These three defining features of the scheme form the basis for the benefits that will accrue to NSW. It is essential to note that the main problem that needs to be solved is the reducing rate of home acquisition by young people in the state (Crabtree, 2015). These young people cannot acquire homes due to their rising costs that render them unaffordable. With the implementation of the shared-equity ownership, the young people will acquire homes more affordably and this is likely to reverse the trend of home ownership among young people in the stat e (Nanda and Parker, 2015). According to Chung Craze (2016), the housing market in Australia is overvalued by 40% based on price to income measures. The article by Chung Craze (2016) also informs that the dwelling values of Sydney and Melbourne is likely to continue rising. The assertion is also supported by Birrell and McCloskey (2016) who point out that the housing problem in Sydney has escalated to a crisis point. This trend is worrying given that the current First Homeowners Scheme is ineffective in helping young people acquire housing in the state. However, the implementation of shared-equity homeownership policy is likely to change this. According to the U.S. Department of Housing and Urban Development (2012), shared equity works well in markets where the rate of increase in home prices is higher that rise in household incomes. This is because its mechanisms create workforce housing that is afforadable not only in the short-term but also in the long-run. The scheme will als o give the residents of NSW more housing options and at the same time allow communities to keep essential employees (U.S. Department of Housing and Urban Development, 2012). The scheme also can help the local governments deal with abondoned and vacant housing due to foreclosure crisis. In this case, shared equity homeownership gives the local governments the opportunity to transform the vacant and abondoned properties into permanently affordable homes and consequently retain public subsidies that have been invested in them (U.S. Department of Housing and Urban Development, 2012). The U.S. Department of Housing and Urban Development (2012) also informs that shared equity housing helps in the reduction of the risks associated with low-income home ownership. Shared equity homeownership reduces risks in two ways according to Lubell (2013). First, when homebuyers purchase homes at prices below the market value, they are insulated significantly againts falling home values. While one can still lose money on a shared equity purchase, it is more difficult because the prices have to fall by a considerable margin before one can sell at a loss. Second, when homebuyers purchase the shared equity home at reduced prices, they are left with other funds to invest in other classes of asset such as education savings and retirement savings. This further improves their assests diversification. The popularity of shared equity homeownership continues to grow as more countries implement the scheme. The programs have proven successful in the provision of affordable and stable home ownership opportunities to families with low incomes who would otherwise not acquire homes due to the high prices in the housing market (Davis, 2010). The programs have also proven to be instrumental in ensuring maximum utilisation of public resources invested in housing. Therefore, NSW is poised to reap from these benefits when the program is implemented. Critical Analysis of Australian Political Institutions The political institutions in any country play a significant role in policy formation. However, according to Marsh (2007), there has been a decline in the value of political and policy conversation in Australia. The author also informs that the confidence in political institutions in the country has been on the decline. The implementation of the shared equity program will give the political institutions a chance of recovering the lost confidence. All the government levels have crucial role to play in shaping how the local housing market operates. Participation of all the levels is essential to ensure better housing outcomes. The state and Commonwealth assistance programs, Commonwealth taxation policies, local and state land use planning processes, among others are required to be integrated together so that affordable housing can be achieved (Centre for Affordable Housing, 2016). This means that a number of institutions both at the local and national levels are involved in the plannin g process for affordable housing. The Centre for Affordable Housing (2016) informs that although the key responsibility for housing policy and funding lies with the territory and the federal government, the local governments have a role to play in the delivery of housing and retention of existing affordable housing. When a local housing strategy is being implemented, the local government work within a larger funding and institutional framework. As result, the local government may draw resources provided by the state and the federal governments. The major challenge that is likely to be encountered when the shared equity program is launched in NSW relates to compatibility with existing frameworks. Given that the existing frameworks have been existence not only in the state but also in the country for a long time, finding a way for shared equity to work together with them can pose a challenge. Therefore, it is necessary for these institutions to work together during its implementation. Critical Analysis of How the Program Should Be Implemented Currently, there are other frameworks in operation in NSW tailored towards ensuring affordable housing for first homeowners. They include The First Home Owner Grant Scheme, and First Home Plus Scheme. However, as previously determined, these programs have been ineffective in increasing the rate of house acquisition by young people in the country (Abelson, 2009; Brown, 2014). Since both the federal and state governments have invested significantly in the existing frameworks, implementing shared equity to run concurrently is not feasible. Therefore, the new shared equity program will have to implemented on its own and other programs done away with. The major challenge likely to be encountered in the implementation is setting up necessary frameworks to support the program. However, given the fact that the federal government has already set up the Affordble Housing Working Group (The Treasury, 2016), the implementation can take place with less challenges The implementation of the program is likely to be supported by a number of institutions including the Commonwealth Rent Assistance (CRA), the Community Housing Directorate, and the Aboriginal Housing Office. Given that both the NSW and federal governments have been running programs for affordable housing in the state, their funding can be channelled towards implementing the shared equity scheme. Therefore, the two level of governments have the capacity to fund the new program. As mentioned earlier, the beneficiaries of implementing the new shared equity program in NSW will be its government and citizens. Other states are can also borrow from the state if it proves successful. Analysis of Policy Transfer According to Stone (2001), emulation involves adopting policy approaches from another jurisdictions to the local conditions. The transfer of the shared equity program will have to include all the government levels. As mentioned ealrier, affordable housing depends on the working together of the various levels of government. Therefore, for the implementation to take place successfully, NSW government will have to set up apparatus that will see to it that all government levels play their roles. The roles of federal government and the NSW government will be to develop the shared equity policy and also to provide funding. The local governments, in this case will facilitate the delivery of the program. The shared equity program, according to L...

Effects Of Sunset Laws On Public Administration Essay

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Sunset laws have a way of holding legislative officials specifically to a higher standard. The Freedom of Information Act was enforced when our government realized the importance of the relationship between access to information and government accountability. This act enables citizens to view a plethora of different files and records from government agencies. 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Addiction As A Dependence On Substance Or Behavior Essay

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Wacc for Fedex Corp. free essay sample

First of all, I would like to thank Ms. Thuy for her enthusiastic guidance and response all of questions to help me complete this exercise easily. Simultaneously, thanks to her professional lectures on class which also build me with deep understanding of how to access and deal with problems in financial management so that I can complete this report. All of the data is collected through 2 website: http://finance. yahoo. com/ and http://www. finra. org/ I. ABOUT FEDEX CORPORATION: FedEx Corporation is a holding company. The Company provides a portfolio of transportation, e-commerce and business services under the FedEx brand, originally known as  FDX Corporation, is an American global  courier  delivery services company headquartered in  Memphis, Tennessee. FedEx Corporation is a Delaware corporation, incorporated October 2, 1997. FDX Corporation was founded in January 1998 with the acquisition of Caliber System Inc. by Federal Express,  the worlds  largest airline  in terms of freight tons flown and the worlds fourth largest in terms of fleet size, delivering packages and freight to more than 375 destinations in nearly every country each day. We will write a custom essay sample on Wacc for Fedex Corp. or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page With the purchase of Caliber, FedEx started offering other services besides express shipping. The  Standard Carrier Alpha Code (SCAC)  is a unique code used to identify transportation companies. It is typically two to four alphabetic letters long. It was developed by the  National Motor Freight Traffic Association  in the 1960s to help the transportation industry for computerizing data and records. FedExs codes include: * FDE – FedEx Express * FDEG – FedEx Ground * FXFE – FedEx Freight * FDCC – FedEx Custom Critical II. STATISTICS AND CALCULATION: 1. Summary  statistics: Accroding to the collected data: There is one non- callable bond issues of FedEx Corporation (FDX) in the ten-year maturity which is FDX. GD, use its yield of maturity as the pre-tax cost of debt. * Market value of equity: 34. 3 billions in USD * Value cash: 34. 02 billions in USD * The beta is 1. 32 and risk-free rate is 2% * A market risk premium of 5% and tax rate of 35% 2. Estimated equation a. The market value of debt: Using the collected data in the appendix 3, the market value of debt can be easily calculated: The market value of FDX’s debt = $250,000,000*105. 08%+$750,000,000*130. 704%+$239,000,000*131%=$1,557,390,000 * Total value of the firm = Total of market value of debt and equity =$34,300,000,000+$1,557,390,000=$35,857,390,000 b. The weights for FedEx’s equity and debt: Weight for equity =34,300,000,00035,857,390,000=95. 6567% Weight for debt=1,557,390,00035,857,390,000=4. 3433% 3. Apply the CAPM to Calculate GM’s WACC Cost of Equity = Risk-Free Rat e + Equity Beta * Market Risk Premium =2%+1. 32*5%= 0. 086 Effective Cost of debt = Rd1-Tc=5. 89%1-0. 35=0. 0376 WACC is the average of the costs of these sources of financing, each of which is weighted by its respective use in the given situation. By taking a weighted average, we can see how much interest the company has to pay for every dollar it finances. A firms WACC is the overall required return on the firm as a whole and, as such, it is often used internally by company directors to determine the economic feasibility of expansionary opportunities and mergers