A 10-year business concession has been identified to cost $20.000 investment, annual revenues of $4.000 and market value of $6,000 at the end of 10 years. After the 10-year study period, the business will be replaced identically and again be replaced at the end of 20 years. Determine the PW of the entire 30-year study period with the interest rate of 10%

A 10-year business concession has been identified to cost $20.000 investment, annual revenues of $4.000 and market value of $6,000 at the end of 10 years. After the 10-year study period, the business will be replaced identically and again be replaced at the end of 20 years. Determine the PW of the entire 30-year study period with the interest rate of 10%

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

See similar textbooks

Similar questions

What is the effective annual rate (EAR) if the stated rate is 8 percent and compounding occurs semiannually? Quarterly? a. The future value of $500 invested at 8 percent for one year b. The future value of $500 invested at 8 percent for five years c. The present value of $500 to be received in one year when the opportunity cost rate is 8 percent d. The present value of $500 to be received in five years when the opportunity cost rate is 8 percent
A debt of P10,000 with interest at the rate of 20% compounded semi-annually is to be amortized by 5 equal payments at the end of each 6 months, the first payment is to be made after 3 years. Find the semi-annual payment and construct an amortization schedule.
An amount, P, must be invested now to allow withdrawals of $1,200 per year for the next 15 years and to permit $350 to be withdrawn starting at the end of year 5 and continuing over the remainder of the 15-year period as the $350 increases by 4% per year thereafter. That is, the withdrawal at EOY six will be $364.00, $378.56 at EOY seven, and so forth for the remaining years. The interest rate is 12% per year. Click the icon to view the interest and annuity table for discrete compounding when i = 4% per year. Click the icon to view the interest and annuity table for discrete compounding when i = 12% per year. The P amount is $ (Round to the nearest dollar.)
4. Determine the equal, end of period, annual worth of a process which will involve an initial outlay of $95000 followed by costs of $11000 at the end of yearl and amounts increasing by $1500 per year through its 14 year life. Assume that the interest rate is 9% per year.
An investment of $1,250,000 is made in 7-year MACRS-GDS equipment. The investment yields annual before-tax returns of $200,000, plus a salvage value of $500,000 at the end of the 10-year planning horizon. The MARRAT is 7%, the income tax rate is 25%, the maximum Section 179 expense deduction is taken and 50% bonus depreciation applies. For the investment, calculate a. After-tax present worth, b. After-tax annual worth, and c. EVA.
An investment pays $2,000 every third year for 45 years (a total of 15 payments). Your opportunity cost is 8% compounded semi-annually. The present value of this investment is: O a. $19,639.28 O b. $13,323.26 O c. $7,317.16 O d. $9,666.46 Oe. $4,762.53
A project consists of an annual investment 47,000.00 for four years, with no residual values. The annual revenue forecast is R$ 110,000.00 in the 6 years following the conclusion of the investments, then R$ 120,000.00 per year for 6 years and, finally, R$ 160,000.00 per year in 6 years. The forecast annual costs (including taxes) is R$70,000.00 in the 6 years following the completion of the investments, then R$80,000.00 per year for 6 years and, finally, R$100,000.00 per year in 6 years . Assume that the minimum attractiveness rate is 12% p.a. and calculate the capital efficiency ratio (NPV / PVI) for that project..
A company expects the cost of equipment maintenance to be $5,000 in year one, $5,500 in year two, and amounts increasing by $500 per year through year 15. At an interest rate of 0.05 per year, the present worth of the maintenance cost is nearest to
A property that produces a first year NOI of $18,000 is purchased for $135,000. The NOI is expected to increase by 7% in the fourth year when some of the leases turnover. The resale price in year 8 is expected to be $149,000. What is the net present value of the property based on the 8-year holding period and a discount rate of 12%? Answer: NPV = $17,829 How do you set this up in excel?
An investor is considering to purchase an apartment for sh. 1 million to be financed by 30% equity and 70% mortgage. This price includes a building value of Sh.900,000, which will be depreciated on a straight-line basis over 27.5 years. The projected Net operating income is Sh. 100,000 during the first year and is expected to increase at 3% per annum over a five-year holding period. The property value is also projected to increase at 3 % per year over a five-year holding period.The investor is in the 28 percent tax bracket for ordinary income and capital gains. The lender has offered a conventional, fixed rate, constant payment loan for sh. 700,000 at a 10 percent interest rate (with monthly payments) over a 15-year term. Required:Calculate the net present value of free cash flows to equity
A Services company is projecting that demand for its services will rise considerably the next three years. They can lease additional equipment for $1,600 at the beginning of every quarter for three years. Alternatively, they can purchase the equipment for $22,995 at 8% compounded quarterly. The salvage value of the equipment after three years is expected to be $4,000. 1. What is the present value of each offer? A. Lease: B. Purchase: 2. Which option would you recommend and how much better is that option in today's dollars?
Suppose an industrial building can be purchased for $2,500,000 and is expected to yield cash flows of $180,000 in each of the next five years. (Note: assume payments are made at end of year.) If the building can be sold at the end of the fifth year for $2,800,000, calculate the IRR for this investment over the five-year holding period. A) 0.09%. B) 4.57%. C) 9.20%. Page 4 of 6 D) 10.37%

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS