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A potential investment has a cost of $440,000 and a useful life of 6 years. Annual cash sales from the investment are expected to be $267,382 and annual cash operating expenses are expected to be $105,332. The expected salvage value at the end of the investment's life is $35,000. The company has a before-tax discount rate of 16%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (i.e. .055-5.5%) Enter negative amounts with a minus sign.) Annual PMT of the investment FV of the investment

A potential investment has a cost of $440,000 and a useful life of 6 years. Annual cash sales from the investment are expected to be $267,382 and annual cash operating expenses are expected to be $105,332. The expected salvage value at the end of the investment's life is $35,000. The company has a before-tax discount rate of 16%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (i.e. .055-5.5%) Enter negative amounts with a minus sign.) Annual PMT of the investment FV of the investment

Essentials Of Investments
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 potential investment has a cost of $440,000 and a useful life of 6 years. Annual cash sales from the investment are expected to be $267,382 and annual cash operating expenses are expected to be $105,332. The expected salvage value at the end of the investment's life is $35,000. The company has a before-tax discount rate of 16%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (i.e. .055 = 5.5%). Enter negative amounts with a minus sign.) Annual PMT of the investment FV of the investment NPV of the investment IRR of the investment $ %
Transcribed Image Text:A potential investment has a cost of $440,000 and a useful life of 6 years. Annual cash sales from the investment are expected to be $267,382 and annual cash operating expenses are expected to be $105,332. The expected salvage value at the end of the investment's life is $35,000. The company has a before-tax discount rate of 16%. Required: Calculate the following. (Round dollar amounts to the nearest whole dollar and IRR to one decimal place (i.e. .055 = 5.5%). Enter negative amounts with a minus sign.) Annual PMT of the investment FV of the investment NPV of the investment IRR of the investment $ %
Consider making an investment of $9,300 each year. If the first $9,300 investment is made at the end of this year, how much will you have in: a. 11 years at 8 percent? (Enter your answer as a positive number rounded to 2 decimal places.) b. 40 years at 7 percent? (Enter your answer as a positive number rounded to 2 decimal places.)
Transcribed Image Text:Consider making an investment of $9,300 each year. If the first $9,300 investment is made at the end of this year, how much will you have in: a. 11 years at 8 percent? (Enter your answer as a positive number rounded to 2 decimal places.) b. 40 years at 7 percent? (Enter your answer as a positive number rounded to 2 decimal places.)
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