Cash Receipts Frequency and Present-Value Consequences Assume that you are about tosell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-salescommission selling price for the property is $500,000. You are willing to finance this transactionover a 20-year period and have told the buyer that you expect a 12% pretax return on the transaction.The buyer has asked you for a payment schedule under several alternatives.Required1. What will be your periodic cash receipt, to earn a 12% return, if payments are received from the purchaser:a. At the end of each week?b. At the end of each month?c. At the end of each quarter?d. At the end of each year?2. What general conclusion can you draw based on the calculations in requirement 1?
Cash Receipts Frequency and Present-Value Consequences Assume that you are about tosell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-salescommission selling price for the property is $500,000. You are willing to finance this transactionover a 20-year period and have told the buyer that you expect a 12% pretax return on the transaction.The buyer has asked you for a payment schedule under several alternatives.Required1. What will be your periodic cash receipt, to earn a 12% return, if payments are received from the purchaser:a. At the end of each week?b. At the end of each month?c. At the end of each quarter?d. At the end of each year?2. What general conclusion can you draw based on the calculations in requirement 1?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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Cash Receipts Frequency and Present-Value Consequences Assume that you are about to
sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-salescommission selling price for the property is $500,000. You are willing to finance this transaction
over a 20-year period and have told the buyer that you expect a 12% pretax return on the transaction.
The buyer has asked you for a payment
Required
1. What will be your periodic cash receipt, to earn a 12% return, if payments are received from the purchaser:
a. At the end of each week?
b. At the end of each month?
c. At the end of each quarter?
d. At the end of each year?
2. What general conclusion can you draw based on the calculations in requirement 1?
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