enkins Security has learned that a rival has offered to supply a parking garage with security for ten years for $40,000 up front and a further $15,000 per year. If Jenkins Security offers to provide security for eight years for an upfront cost of 70,000 and a separate yearly payment, what is the maximum that this yearly payment can be so that Jenkins' offer matches the equivalent annual annuity of their rival's offer? (Assume a cost of capital of 8%.) OA. -$2,671 DB. - $3,142 DC. - $2,828 O D. - $2,514

enkins Security has learned that a rival has offered to supply a parking garage with security for ten years for $40,000 up front and a further $15,000 per year. If Jenkins Security offers to provide security for eight years for an upfront cost of 70,000 and a separate yearly payment, what is the maximum that this yearly payment can be so that Jenkins' offer matches the equivalent annual annuity of their rival's offer? (Assume a cost of capital of 8%.) OA. -$2,671 DB. - $3,142 DC. - $2,828 O D. - $2,514

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 project contractor needs P500,000 for his operation. One financial institution is willing to lend him the money for one year at 12.5% interest per annum (discounted). Another lender is charging 14%, with the principal and interest payable at the end of one year. A third financier is willing to lend him P500,000 payable in 12 equal monthly installments of P46,000. Which offer is best for him?
A downtown bank promises its potential employees a $ 8000 sign-on bonus, an additional bonus of $ 12000 two years from now, an additional bonus of $ 19000 four years from now, and an additional bonus of $ 23000 six years from now. Lavanya was hired today but only intends to work for this bank for three years. What is the present value of this bonus payment structure to her? (Assume that money is worth 8% p.a. compounded quarterly)
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A firm, whose cost of capital is 8 percent, may acquire equipment for $146,825 and rent it to someone for a period of five years. Note: Although payment of rent is typically considered to be an annuity due, treat it as an ordinary annuity when completing this problem in a spreadsheet or when using present value factors. If the firm charges $38,730 annually to rent the equipment, what are the net present value and the internal rate of return on the investment? Use Appendix D to answer the questions. Use a minus sign to enter negative values, if any. Round your answers for the net present value to the nearest dollar and for the internal rate of return to the nearest whole number. NPV: $ IRR: % Should the firm acquire the equipment? The firm acquire the equipment as the net present value is , and the internal rate of return the firm's cost of capital. If the equipment has no estimated residual value, what must be the minimum annual rental charge for the firm to earn the required 8…
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