6) Suppose two entrepreneurial engineers have an idea for a new product that they plan to launch 3 years from now. In three years, each engineer will need $10,000 to purchase equipment needed during that launch year. If each engineer wants to save enough money over the next three years to have $10,000, how much should be invested each year if the interested rate is 7%? Draw the cash flow diagram from the perspective of the engineers.

6) Suppose two entrepreneurial engineers have an idea for a new product that they plan to launch 3 years from now. In three years, each engineer will need $10,000 to purchase equipment needed during that launch year. If each engineer wants to save enough money over the next three years to have $10,000, how much should be invested each year if the interested rate is 7%? Draw the cash flow diagram from the perspective of the engineers.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Wally, president of Wally's Burgers, is considering franchising. He has a potential franchise agreement that would see him receive 13 end-of-year payments starting one year from now. The first two payments would be $30, 000 and $ 25,000 in one and two years respectively, and then $21,000 per year after that for 11 years. If Wally requires a return of 6%, what is the present value of this stream of cash flows?
Consider the following three investment opportunities: Project I would require an immediate cash outlay of $50,000 and would result in cash savings of $18,000 each year for 4 years. Project II would require cash outlays of $8,000 per year and would provide a cash inflow of $35,000 at the end of 4 years. Project III would require a cash outlay of $34,000 now and would provide a cash inflow of $55,000 at the end of 4 years. PV factor for $1 annuity over 4 years at 12% is 3.037 and PV factor of $1 for 4 year at 12% is 0.636. The discount rate is 12%. 1. What is the NPV from Project-I. Show your work 2. What is the NPV from project-II. Show your work. 3. What is the NPV from Project-III. Show your work. 4. Which of the three project should be accepeted and which one(s) should not be accepeted? Why?
You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $10.5 million today and $5.4 million in one year. The government will pay you $21.6 million in one year upon the building's completion. Suppose the interest rate is 10.1%. a. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today? a. What is the NPV of this opportunity? The NPV of the proposal is $ million. (Round to two decimal places.)
(Use Calculator or Formula Approach) Suppose you need $15,000 in 3 years . If you can earn 6% annually, how much do you need to invest today? If you could invest the money at 8%, would you have to invest more or less than at 6%? How much?
i need the answer quickly
You run a construction firm. You have just won a contract to build a government office complex. Building it will require an investment of $10.5 million today and $4.9 million in one year. The government will pay you $20.9 million in one year upon the building's completion. Suppose the interest rate is 10.1%. a. What is the NPV of this opportunity? b. How can your firm turn this NPV into cash today? a. What is the NPV of this opportunity? The NPV of the proposal is $ million. (Round to two decimal places.)
You found that opening your own cake shop is a worthwhile project. After scouting around you found out that you will need an initial capital of P50,000.00. Your estimate of the net cash flow for the next four years are as follows: Year 1: P20,000.00 Year 2: 25,000.00 Year 3: 25,000.00 Year 4: 30,000.00 Will pursue opening your cake shop?
Answer these essay questions. Be sure to show your work. Calculating Future Values 1. You have $35,000 you want to invest for the next 20 years to help with retirement. An investment plan is presented with a 9% payout over the first 10 years, followed by a 15% payout for the final 10 years. What is the total at the end of the full 20 years? Share how your calculations. Would the amount be different if it paid you 15% per year for the first 10 years and 9% per year for the next 10 years? Explain why or why not? 2. Finding the time necessary until you pay off a loan is simple if you make equal payments each month. However, when paying off credit cards many individuals only make the minimum monthly payment, which is generally 1% to 2% of the balance or $25 whichever is greater. Locate the credit card calculator at www.fincalc.com and work out this exercise: a) You currently owe $25,000 on a credit card with a 16% interest rate and a minimum payment of $25 or 1% of your balance. b) How…
Investment X offers to pay you $5,300 per year for eight years, whereas Investment Y offers to pay you $7,300 per year for five years. Which of these cash flow streams has a higher present value if the discount rate is 5% ? If the discount rate is 15% ? (Solve this using excel formula and provide formulas, also solve this using a financial calcuator solution. Show your work please)
Please compute this manually and make sure it is easy to read and understand. Harry Dukee has been presented with an investment opportunity which will yield end of year cash flows of P30,000 per year in years 1 through 4; P35,000 per year in years 5 through 9; and P40,000 in year 10. This investment will have a cost of P250,000 today and the cost of capital is 10%. What is the Net Present Value?
Snyder Company is considering purchasing equipment. The equipment will produce the following cash inflows: Year 1, $25,000; Year 2, $30,000; and Year 3, $40,000. Snyder requires a minimum rate of return of 11%.What is the maximum price Snyder should pay for this equipment? Please show how to do it using financial calculator. THnaks.
If the appropriate interest rate to use when evaluating potential project for the firm is 10%, what is the present value of these cash flows?

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