Clara operates a specialized financial services business in Toronto. She's currently considering purchasing an exclusive service agreement from a competitor for $110,000, but would like to ensure that the investment would meet her payback rule of five years. The service agreement would guarantee net returns of $32,000 per year, but would also require her to pay $16,000 for a regulatory audit every other year (starting from the first year). a. What is the payback period on this investment? Years? Months? (Round up to the next month) b. Does this investment satisfy Clara's payback rule? Yes/No Kindly use all the decimals. DO NOT ROUND
Clara operates a specialized financial services business in Toronto. She's currently considering purchasing an exclusive service agreement from a competitor for $110,000, but would like to ensure that the investment would meet her payback rule of five years. The service agreement would guarantee net returns of $32,000 per year, but would also require her to pay $16,000 for a regulatory audit every other year (starting from the first year). a. What is the payback period on this investment? Years? Months? (Round up to the next month) b. Does this investment satisfy Clara's payback rule? Yes/No Kindly use all the decimals. DO NOT ROUND
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
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4.4 Clara operates a specialized financial services business in Toronto. She's currently considering purchasing an exclusive service agreement from a competitor for $110,000, but would like to ensure that the investment would meet her payback rule of five years. The service agreement would guarantee net returns of $32,000 per year, but would also require her to pay $16,000 for a regulatory audit every other year (starting from the first year).
a. What is the payback period on this investment?
Years? Months?
(Round up to the next month)
b. Does this investment satisfy Clara's payback rule?
Yes/No
Kindly use all the decimals. DO NOT ROUND
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