Re: Instalment Receipts

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In Reply to: Re: Instalment Receipts posted by Mike Fitzgerald on January 19, 1999 at 19:19:00:

: Mark,
: In November 97 we purchased Telstra (Australian)
: at an initial part payment of $1.95 each. These
: were called Instalment Receipts. Late last year we
: had to pay a final payment of $1.35. These then
: became fully paid shares.
: What I want to know is how to enter this final
: payment into FM so as to keep everything in
: chronological order.
: Regards
: Mike

: How do you enter a final payment into the system to
: : : convert an instalment receipt into a fully paid share.
: : : (eg TLS)?
: : : Regards
: : : Mike Fitzgerald

: : Mike,
: : Can you give us the details of these transactions involved?

: : Thanks,
: : Mark
: : --
: : Mark Beiley
: :
: : Fund Manager for Windows 3.1x/95/98/NT
: :
: :

Hi Mike,
I assume the shares you purchased in November 97 were worth more than the $1.95 you paid? If so, this could be modeled as a purchase of the complete shares originally, plus a loan. This would require the use of 2 investments, one for the security, and another for the loan. You would just have 1 purchase in the security, at the actual real price. You would have a corresponding redemption from your cash account for this amount. The value of your cash account would display less than you actually have in the account, representing the loan you're receiving to buy these shares. When you make the second payment, record this as a deposit into this cash account, eliminating the negative amount remaining from the initial purchase. This does model the performance correctly when the 2 investments are considered together. Someone else may have another idea on how to track these?

Thanks,
Mark
--
Mark Beiley

Fund Manager for Windows 3.1x/95/98/NT

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