A building is expected to require $1,000,000 in capital improvement expenditures in five years (60 months). The building’s net operating cash flow prior to that time is expected to be at least $20,000 at the end of every month. How much of that monthly cash flow must the owners set aside each month in order to have the money available for the capital improvements, assuming a monthly interest rate is 1.5%?**Group of answer choices:**- $14,332.83- $13,609.73- $12,666.67- $10,393.43

A building is expected to require (T) = $1,000,000In the duration (t) = 60 months.In 1st month a is…

Answered: A building is expected to require…

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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A property worth $16 million can be refinanced with an 85% loan at 9.5% over 20 years. The balance on the current loan is $12,148,566. Loan payments are $113,302 per month. The loan balance in 10 years will be $8,396,769. If the property is expected to be sold in 10 years, what is the incremental cost of refinancing? a)11.18% b)12.42% c) 10.45% d) 10.94%
A special-purpose machine toolset would cost $20,000. The toolset will befinanced by a $10,000 bank loan repayable in two equal annual installments at 10% compounded annually. The tool is expected to provide annual savings (material) of $30,000 for two years and is to be depreciated by the three-year MACRS method. This special machine tool will require annual O&M costs in the amount of $5,000. The salvage value at the end of two years is expected to be $8,000. Suppose that it is expected a 6% annual inflation during the project period. Assuming a marginal tax rate of 40% and an MARR of 20% (inflation-adjusted), what is the net present worth of this project?(a) $16,301(b) $24,558(c) $23,607(d) $18,562
You need to prepare for three large, upcoming project expenditures which will begin 3 years from now. The first required cash flow will be $56,000, the next year will require $94,000, and then $132,000. If you begin setting aside funds from your current budget next month, how much do you need to save each month in order to have enough to cover all three cash flows the day the first cash flow comes due? Assume you can invest these funds at 8.4 percent APR, compounded monthly. Please demonstrate how to calculate using a financial calculator, when possible.
A firm wants to sponsor a new engineering lab at a local university. This requires $4M to construct the lab, $1.5M to equip it, and $750,000 every 6 years for new equipment. What is the required endowment if the university will earn 8% interest on the funds? Answer: $6,777,957
Project Marvel is a five-year project. The project has a total cash inflow of $350,000. The present value of such inflows is $275,000. The project requires an initial investment of $200,000 and additional working capital of $25,000. What is the net present value of the project? multiple choice $0 $50,000 ($50,000) ($250,000)
A new hotel built in Banff cost $56 million to build. The owner's financing arrangements allow for quarterly payments at 8.2% compounded semi-annually over the next 20 years. The first payment is to be made today. a. What is the amount of the final payment? Number b. Calculate the principal and interest portions of the payments in the final five years. Principal (PRN) = Number Interest (INT) = Number
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The Salt Store is evaluating a capital expenditure proposal with the following predicted cash flows: Initial investment $(75,000) Operations, each year for four years 25,000 Salvage 8,000 The accounting rate of return on the initial investment presented is:
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A project requires the following investments: initial investment of $ 3,000,000, from the first month and for 6 consecutive months a monthly investment of $ 350,000. If $6,250,000 is received at the end of the year, what was the monthly rate of return?
An investment made with an expenditure of $160,000 at the start of the project. The income from the project at the end of each year for 5 years is $80000, $90000, $85,000, $75,000 and $70,000. He made an investment of $20000 again at the end of 2nd year. The maintenance will cost 1500$ for the first year and it increments by 500$ for the second year and third year onwards it increments by 1000$. The salvage value is 70,000$. Draw a CFD for the project and give the analysis of the project based on the CFD.
A project requires an initial investment of $150,000, to be depreciated straight-line over 3 years to an expected salvage value of $0. In addition, working capital will increase during the life of the project and amount to 20% of next year's revenues, with the investment in working capital to be made at the beginning of each year. The project will generate $150,000 additional annual revenues and $85,000 additional annual expenses. The tax rate is 25%. Cost of capital amount to 7,5%. Please calculate the Net Present Value of the project and show your calculations. Would you recommend the investment? Please explain your advice.

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