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 $15,000 for a regulatory audit every other year (starting from the first year). a. What is the payback period on this investment? year(s)? month(s)? b.Does this investment satisfy Clara's payback rule Yes/No
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 $15,000 for a regulatory audit every other year (starting from the first year). a. What is the payback period on this investment? year(s)? month(s)? b.Does this investment satisfy Clara's payback rule Yes/No
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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8. 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 $15,000 for a regulatory audit every other year (starting from the first year).
a. What is the payback period on this investment?
year(s)? month(s)?
b.Does this investment satisfy Clara's payback rule
Yes/No
Kindly keep all the decimals for all the procedures, DO NOT ROUND
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