7 7. A small business purchased now for P50,000 will lose P9,600each year for the first 4 years. An additional investment of P30,000in the business will required at the end of the fourth year. After15 years the business can sold for P70,000. What should be theprofit each year from the fifth through the fifteeth year to obtain arate of return of 25%?Ans. P55,083103

Information Provided: Purchase price = 50,000 Amount lost each year for 4 years = 9600 Additional…

7. A small business purchased now for P50,000 will lose P9,600 each year for the first 4 years. An additional investment of P30,000 in the business will required at the end of the fourth year. 15 years the business can sold for P70,000. What should be the profit each year from the fifth through the fifteeth year to obtain a rate of return of 25%? Ans P55.083 103

7. A small business purchased now for P50,000 will lose P9,600 each year for the first 4 years. An additional investment of P30,000 in the business will required at the end of the fourth year. 15 years the business can sold for P70,000. What should be the profit each year from the fifth through the fifteeth year to obtain a rate of return of 25%? Ans P55.083 103

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 15PROB

See similar textbooks

Similar questions

If $8,000 is invested in a certain business at the start of the year, the investor will receive $2,400 at the end of each of the next four years. What is the present value of this business opportunity if the interest rate is 4% per year? OA. $1,138.8 OB. $355.88 OC. $711.75 OD. $854.1 C...
1. Investment in Sunrise Company is P 100,000 at the end of 5 years plus P 24,000 annually for 4 years afterwards. Investment in XYZ company offers P 50,000 semi-annually P 15,000 every 6 months after 6 years. Assume that the money is worth 9% compounded annually, which investment is preferable?
If $10,000 is invested in a certain business at the start of the year, the investor will receive $3,000 at the end of each of the next four years. What is the present value of this business opportunity if the interest rate is 4% per year? A. $1,068 B. $890 C. $445 D. $1424
a) How much should you invest at 12% interest today if you want to receive TK. 10,000 at the cnd of 3rd year; TK. 20,000 at the end of Sth year; and TK. 25,000 at the end of 7th year if interest is compounded continuously? b) A company is thinking of acquiring fixed assets worth TK. 10 million on financial lease for five ycars at an interest rate of 12%. The lcase would be amortized over five years by equal annual installments. You are required to calculate annual installment and show how lease is amortized over five years if installment is paid at year cnd or at the beginning of the year.
You are promised an 8 year streams of income from buying a new technology at the initial amount of P 40,000.00. If the income increases by 3%, 4%, 5% and 6% respectively from the 2nd to 5th year then return to initial amount from the 6th to the 8th year, what is the present value of stream of income if the current interest prevailing is 6.5%?
1. If the interest rate is 8% per year, what decision would you make based on the decision tree diagram in Figure below. (0.6) Introduce New Product $200,000 profit per year for six years, starting at ΕΟΥ 3 -$1,000,000 at ΕΟ 2 (0.4) $280,000 profit per year for six years, starting at ΕΟΥ 3 Year 0 $0 profit/yr. for 8 years Figure 10.3. Decision Tree Diagram Do Nothing
A company has two investment opportunities. Alternative 1 (Alt. 1) pays $8,000 (inflow) two years from now, and $26,000 (inflow) four years from now. Alternative 2 (Alt. 2) pays $8,000 (inflow) at the end of every year for five years. Interest is 6.71% compounded annually. Which is the preferable alternative? Round the values for PV to the nearest cent. TWO YEARS P/Y C/Y Z I/Y PV PMT FV Alt. 1 = $ Select an answer % Submit Question FOUR YEARS Alt. 2 = $ % Write the Discounted Cash Flow (DCF) for Alt. 1 and Alt. 2. Enter positive values for Alt. 1, and Alt. 2, rounded to the nearest dollar. A Choice FIVE YEARS %
Which offer has a better market value
A company has two investment opportunities. Alternative 1 (Alt. 1) pays $10,000 (inflow) two years from now, and $20,000 (inflow) four years from now. Alternative 2 (Alt. 2) pays $6,500 (inflow) at the end of every year for five years. Interest is 8.14% compounded annually. Which is the preferable alternative? Round the values for PV to the nearest cent. TWO YEARS P/Y C/Y N I/Y PV PMT FV $ Alt. 1 = $ % Alt. 2 = $ $ FOUR YEARS % GA SA FIVE YEARS Write the Discounted Cash Flow (DCF) for Alt. 1 and Alt. 2. Enter positive values for Alt. 1, and Alt. 2, rounded to the nearest dollar. % Choice Select an answer →
Q1. A machine costs the company K98,000 and its effective life is estimated to be 12 years. If the scrap realizes K3,000 only, what amount should be retained out of profits at the end of each year to accumulate at compound interest at 5% per annum? Q2. A mortgage of K200,000 is to be repaid over a 25 year period at a fixed interest rate of 4.5 %. Calculate the monthly repayments.
Tricorp Company is considering an investment that is expected to return $320,000 after four years. If Tricorp demands a 15% return, what is the most that it will be willing to pay for this investment? 15%, 4 years annually Factor Present value of a $1 0.572 Future value of $11.749 Present value of an annuity 2.855 Future value of an annuity 4.993 a. $320,000 b. $177,696 c. $183,040 d. $45,216 e. $278,272
A company has two investment opportunities. Alternative 1 (Alt. 1) pays $10,000 (inflow) two years from now, and $26,000 (inflow) four years from now. Alternative 2 (Alt. 2) pays $5,500 (inflow) at the end of every year for five years. Interest is 6.71% compounded annually. Which is the preferable alternative? Round the values for PV to the nearest cent. Round the values for Alt. 1 and Alt. 2 to the nearest dollar. TWO YEARS FOUR YEARS FIVE YEARS P/Y C/Y I/Y 96 PV PMT %24 FV Alt 1=$ Alt. 2 =$ Choice Select an answer > Next Question