A certain property is being sold and the new owner received two bids.The first bidder offered to pay P400,000 each year for 5 years, eachpayment is to be made at the beginning of each year. The secondbidder offered to pay P240,000 first year, P360,000 the second andP540,000 each year the next 3 years, all payments will be made at thebeginning of each year. If money is worth 20% compounded annually,which bid should the owner of the property accept?

Present value (PV) is the current value of a future sum of money of cash flows given a specified…

Answered: A certain property is being sold and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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An investor undertakes a 12-year project in which he invests £50,000 at the outset and receives the following income: • • During the first four-year period: £4,000 per annum paid quarterly in arrears. During the second four-year period: £X per annum paid half-yearly in arrears. During the final four-year period: £12,000 per annum paid continuously. There are no other payments under the investment. If the investor achieves an internal rate of return of 9% per annum convertible half-yearly, find the value of X.
A company buys a color printer that will cost $ 17,000 to buy, and last 5 years. It is assumed that it will require servicing costing $ 500 each year. What is the equivalent annual annuity of this deal, given a cost of capital of 8 % ? A) - $4,758 B) - $3,330 C) - $4, 282 D) - $3,806
Can anyone help me to answer this ?
Jenkins Security has learned that a rival has offered to supply a parking garage with security for ten years for $40,000 up front and a further $15,000 per year. If Jenkins Security offers to provide security for eight years for an upfront cost of $70,000 and a separate yearly payment, what is the maximum that this yearly payment can be so that Jenkins' offer matches the equivalent annual annuity of their rival's offer? (Assume a cost of capital of 8%.) O A. - $2,671 O B. - $3,142 Oc. - $2,828 O D. - $2,514
A project contractor needs P500,000 for his operation. One financial institution is willing to lend him the money for one year at 12.5% interest per annum (discounted). Another lender is charging 14%, with the principal and interest payable at the end of one year. A third financier is willing to lend him P500,000 payable in 12 equal monthly installments of P46,000. Which offer is best for him?
A wedding maching custs $250,000. A facility purchases one and plans to use it for 10 years, at 'which point it will have a value of 35,000. calculate the depreciation allowance and book value after 5 yrak of use using Straight line depreciation balance depreciation (a) (b) using deckning () Uring MACKS 7-year property with 50% bonus depreciation (d) using MACKS 7- year property with 50% bonus depreciation of the machine is sold if in year s?
Suppose a state lottery prize of $8 million is to be paid in 5 payments of $1,600,000 each at theend of each of the next 5 years. If money is worth 12%, compounded annually, what is the presentvalue of the prize? (Round your answer to the nearest cent.)
The following proforma shows unleveraged cash flows for a property if an investor were to purchase it today and resell it at the end of the third year: (Show answer in Excel) What is the present value of the each of the discounted cash flows from Year 1, Year 2, and Year 3, using a discount rate of 8.75% (hint: calculate each on separately)? What is the Net Present Value of this investment?
After 10 years 2 properties flat 1 and flat 2 are sold. Their value has increased at an annual rate of 2.67% p.a. and capital gains taxes (CGT) are paid at a rate of 19% on the capital gains. The initial properties flat 1 and flat 2 were purchased by the investor for 450000 and 150000. a) what formulas would i use to calculate the final price of the properties after 10 years with the increase annual rate taken into consideration and what value do you get b) compute the NPV of the sale of each of the 2 flats , after capital gains taxes could you please explain what formuals i would use here and what method i should follow, not necessarily a value for b as not all the data in my spreadsheet i can attach
Help me solve this one, rush!!
You have been offered a contract from Comp Co. You will receive $120,000 up front from Comp Co. In exchange, you will provide $50,000 in services each year for 3 years. Your cost of capital is 10%. Find the NPV and IRR of the deal. Should you accept the contract? Explain.
Assume you own a parcel of land that a solar farm company is developing for solar energy production. For the exclusive rights to this piece of property, they are contractually obligated to pay a lump sum of $6, 400.00 per acre fifteen years from now, and another lump sum of $ 7,000.00 per acre thirty years from now to the owner at that time. Assuming a 7% annual interest rate, what would be the minimum market value of this property (basically assuming no income after how do i do it in excel? year 30)

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