18Bruce is considering the purchase of a restaurant named Hard Rock Hollywood. With the help of his accountant, Bruce projects the netcash flows (cash inflows less cash outflows) from the restaurant to be the following amounts over the next 10 years:Years1 to 678910Amount$80,000 (each year)90,000100,000110,000120,000Bruce expects to sell the restaurant after 10 years for an estimated $1,100,000. (EV of $1. PV of $1. FVA of $1. and PVA of $1) (Usetables, Excel, or a financial calculator. Round your answer to 2 decimal places.)Required:1-a. Calculate the total present value of the net cash flows if Bruce wants to make at least 10% annually on his investment. (Assume allcash flows occur at the end of each year. Be sure to include the selling price in your calculation.)1-b. Assuming the restaurant is listed for sale at $1,050,000, should he purchase the restaurant?Complete this question by entering your answers in the tabs below.Reg 1AReq 18Calculate the total present value of the net cash flows if Bruce wants to make at least 10% annually on his investment.(Assume all cash flows occur at the end of each year. Be sure to include the selling price in your calculation.)Total present valueTAReq 18

Present Value is the current price of future value which will be received in near future at some…

Answered: Bruce is considering the purchase of a…

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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Following the last question - John is evaluating the idea to open an ice cream shop on a piece of land. The followings are what he might include in the cash flows: Instead, John can earn $120,000 if he decides to sell the land today. He bought this land for $350,000 two years ago. • Outfitting the space for an ice cream shop would require a capital expenditure of $150,000 today. It'll require an investment of $30,000 in inventories for making the ice creams today. What are the opportunity costs of opening the ice cream shop? 1 · . -$120,000 O-$180,000 O-$350,000 O-$270,000 4
2. Jane Summers has just inherited millions from her mother's estate. She is considering investing part of these funds in a small catering business. She would need to purchase a delivery van, equipment, and inventory costing $150,000 to equip the business. Jane's marketing studies indicate that the annual net cash inflow from the business will amount to $36,000. Jane wants to operate the catering business for only 6 years. She estimates that the equipment will have a $10,000 salvage value at the end of that time and that she will just retire and close down the business. Jane's required rate of return is 10%. (Note: relevant present value tables are in the textbook in ch 26 at pg 1121, or use from other sources, as desired.)Required:Compute the net present value of this investment. What would you advise Jane based on your calculations? Show your calculations, including any present value table amounts.
Johnny's Lunches is considering purchasing a new, energy-efficient grill. The grill will cost $38,000 and will be depreciated straight-line over 3 years. It will be sold for scrap metal after 5 years for $9,500. The grill will have no effect on revenues but will save Johnny's $19,000 in energy expenses. The tax rate is 30%. Required: What are the operating cash flows in each year? What are the total cash flows in each year? Assuming the discount rate is 12%, calculate the net present value (NPV) of the cash flow stream. Should the grill be purchased? (round answers to 2 decimal places)
Akeem Joffer hopes to a new cabin on Webb Lake in Maine. Akeem has $13,000 saved today and wants to save $7,000 every year for the next nine years. Assume Akeem can earn 11% on his investments. Compute the amount Akeem expects to have available to purchase the cabin in 9 years. 5. Reggie Hammond has $300,000 in cash located in a suitcase in the trunk of his car.Reggie deposits this amount in Gibraltar Bank. The bank offers a 6.7% annual rate and pays interest quarterly. Reggie hopes to have $1,600,000 at the end of five years. Compute the quarterly savings Reggie must deposit into this account in order to achieve his goal. 6. Billy Ray Valentine promises to pay his friend Louis Winthorpe a deferred annuity of $60,000 beginning in year five and continuing through year eleven plus a three-year deferred annuity of $7,000 that begins in year 15. Interest rate is 8.2 % . Compute the amount Billy Ray needs today to fulfill his obligation to his friend
10) Assuming the APR on your credit card is 24 percent and your average daily balance this month was $8,000, what will your interest or finance charges for the month be?
Nikul
Subject - account Please help me. Thankyou.
Maintenance for the car is projected at $1000 at the end of the first year and $2000 at the end of each subsequent year. Al expects to sell the car at the end of the fourth year (after paying for the maintenance work) for $12,000. Using these facts, prepare a table of cash flows.
Bowie is trying to determine the amount to set aside so that he will have enough money on hand in 3 years to overhaul the engine on his vintage used car. While there is some uncertainty about the cost of engine overhauls in 3 years, by conducting some research online, John has developed the following estimates. Engine Overhaul Estimated Cash Outflow $310 620 840 990 Probability Assessment 10% 30% 50% 10% Click here to view factor tables How much should John Bowie deposit today in an account earning 8%, compounded annually, so that he will have enough money on hand in 3 years to pay for the overhaul? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to decimal places, e.g. 458,581.) Deposit amount $____?
Bruce is considering the purchase of a restaurant named Hard Rock Hollywood. The restaurant is listed for sale at $1,030,000. With the help of his accountant, Bruce projects the net cash flows (cash inflows less cash outflows) from the restaurant to be the following amounts over the next 10 years: Years Amount 1-6 $ 83,000 (each year) 7 93,000 8 103,000 9 113,000 10 123,000 Bruce expects to sell the restaurant after 10 years for an estimated $1,130,000. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Round your answer to 2 decimal places.)Required:1-a. Calculate the total present value of the net cash flows if Bruce wants to make at least 10% annually on his investment. (Assume all cash flows occur at the end of each year.) 1-b. Should he purchase the restaurant?

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