Future value. A speculator has purchased land along the southern Oregon coast. He has taken a loan with the end-of-year payments of $7,400 for 12 years. The loan rate is 6%. At the end of 12 years, he believes that he can sell the land for $110,000. If he is correct on the future price, did he make a wise investment? What is the future value of the loan 12 years from now? $ (Round to the nearest cent.)

Future value. A speculator has purchased land along the southern Oregon coast. He has taken a loan with the end-of-year payments of $7,400 for 12 years. The loan rate is 6%. At the end of 12 years, he believes that he can sell the land for $110,000. If he is correct on the future price, did he make a wise investment? What is the future value of the loan 12 years from now? $ (Round to the nearest cent.)

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

See similar textbooks

Related questions

Q: 12. A property has an NOI of $800,000. If you have a loan with annual debt service of $600,000, what…

A: DCR (Debt coverage ratio) It helps to determine the available net operating income to cover per unit…

Q: a)How much should you be willing to pay today for Gopher Gardens? b) If you can buy the property…

A: The price we are willing to pay is the PV of all future rent and selling price of the property…

Q: Suppose that the firm Cherry Blossom has an orchard they are willing to sell today. The net annual…

A: This question is based on the concept of fair value asset pricing which says that the fair market…

Q: You Just won a lottery that promise to pay you 100,000 exactly 10 years from now Because the 100,000…

A: Immediate cash flow is that cash flow which an investor is required to incur at time zero. This cost…

Q: Suppose that you need to take out a loan today and anticipate being able to pay back $50,000 sixteen…

A: Let the loan amount = X Amount to payback (A) = $50000 n = 16 years

Q: so.3 You own a lot in Key West, Florida, that is currently unused. Similar lots have recently…

A: Current price of land (S) = $1,350,000Strike price of land (K) = $1,600,000Time (t) = 1…

Q: 8. You have just received a windfall from an investment you made in a tri d's business. She will be…

A: The concept of time value of money will be used here. When cash is received at different points in…

Q: Future value: A spectator has purchased land along the southern Oregon coast. He has taken out a 10…

A: Future value is the expected value of current investment in future date at a specific interest…

Q: How much would you pay to participate in a real estate project that pays nothing for the first 10…

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

Q: An investor is considering the following opportunity: He will put capital into a start-up company…

A: Present value is a financial concept used to determine the current worth of future cash flows,…

Q: PLEASE ANSWER THE QUESTIONS BELOW AND BE SURE TO SHOW THE FORMULAS AND THE WORK. THANIK YOU :) 1)…

A: Amount Invested 5 years ago is $100,000 Interest rate is 7.5% Additional Investment is $1,500 per…

Q: What annual interest rate would the investment have to yield to double in 5 years?

A: Present Value (Investment) = $2500 Future Value = $2500 x 2 = $5000 Time = 5 Years Rate of Return =…

Q: What is the excel function and formula for this question? Off-The-Books Investment Firm, LLC, has…

A: The return which is determined in terms of percentage which is expected to be earned on investment…

Q: You can buy property today for $2.0 million and sell it in 4 years for $3.0 million. (You earn no…

A: The value that is determined after compounding the present value over interest rates are known as…

Q: ou just purchased a parcel of land for $54,000. To earn a 11% annual rate of return on your…

A: FV = PV * (1 + r)^nWhere FV = Future ValuePV = Present Value of Land = $54,000r = rate of interest =…

Q: Please Show me the calculations!! A real estate investor is considering the purchase of an…

A: The concept of time value of money will be used here. To compute the future value we compound the…

Q: An investor is purchasing an industrial building. He needs to replace the roof today at a cost of…

A: Future value is the value of an investment or asset at a specified date in the future, based on the…

Q: Interest rate (with changing years). Keiko is looking at the following investment choices and wants…

A: The annual rate of return is the return earned over the investment made throughout the year. It is…

Q: Your broker has offered you an investment opportunity at a cost of $ 500. The opportunity offers…

A: The time value of money is a foundational principle in finance that takes into account the effect of…

Q: Computing the Present Value of a Single Amount Depp is reviewing an investment that will provide a…

A: Definition: Present value: This is the amount of future value reduced or discounted at a rate of…

Question

Future value. A speculator has purchased land along the southern Oregon coast. He has taken a loan with the end-of-year payments of
$7,400 for 12 years. The loan rate is 6%. At the end of 12 years, he believes that he can sell the land for $110,000. If he is correct on the
future price, did he make a wise investment?
What is the future value of the loan 12 years from now?
(Round to the nearest cent.)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

A real estate investor is considering the purchase of an apartment building that currently provides income of $30,000 and is expected to grow in income by 3% for the next 4 years. You would receive income from today, year 0, through year 4. At the end of year 4, they expect to sell the property for $800,000. The investor has a discount rate of 6%. How much should an investor be willing to pay for this property? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure.
Suppose you want to purchase a home for $525,000 with a 30-year mortgage at 4.84% interest. Suppose also that you can put down 30%. What are the monthly payments? (Round your answer to the nearest cent.) $ What is the total amount paid for principal and interest? (Round your answer to the nearest cent.) $ What is the amount saved if this home is financed for 15 years instead of for 30 years? (Round your answer to the nearest cent.)
Future value. A speculator has purchased land along the southern Oregon coast. He has taken a loan with the end-of-year payments of $7,600 for 10 years. The loan rate is 7%. At the end of 10 years, he believes that he can sell the land for $110,000. If he is correct on the future price, did he make a wise investment? ..... What is the future value of the loan 10 years from now? $ (Round to the nearest cent.)
An investor is looking for a loan for an investment property that he has found. He can afford a monthly payment of $1,475. The interest rated quoted to him was 7.25%. He built the following table from that information. A $74,049 $125,638 $161,580 t 5 10 15 a) A(5) = b) If the investment property cost $161,580, how many years must the investor make monthly payments? t 20 25 30 A $186,620 $204,066 $216,220
Future value. A speculator has purchased land along the southern Oregon coast He has taken a loan with the end-of-year payments of $8.000 for 10 years. The loan rate is 5%. Asthe end of 10 years, he believes that he can sell the land for $90,000. If he is correct on the future price, did he make a wise investment? What is the future value of the loan 10 years from now? (Round to the nearest cent.).
An investment offers $3,850 per year for 15 years, with the first payment occurring one year from now. a. If the required return is 6 percent, what is the value of the investment? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What would the value be if the payments occurred for 40 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What would the value be if the payments occurred for 75 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What would the value be if the payments occurred forever? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Present value of 15 annual payments b. Present value of 40 annual payments c. Present value of 75 annual payments d. Present value of annual payments forever
You just won a lottery that promises to pay you $1 million exactly 10 years from today. Because the $1 million payment is guaranteed by the state in which you live, opportunities exist to sell the claim today for an immediate lump-sum cash payment. What is the least you will sell your claim for if you could earn 5.05 % on similar-risk investments during the 10-year period?
Assume you won the lottery and that you have two options for receiving the prize money. You can receive $300,000 today or receive payments of $2,700 a month for 20 years. If you can make a nominal 8% return, which option should you take and why? (Hint: To compare investments involving cash flows, you always compare the present value of the future cash flows to identify the most attractive option.) Multiple Choice The $2,700 per month. It is better to have payments spread out than receive a lump sum. The lump sum today. The present value of the lump sum is greater than the payments. The $2,700 per month. The present value of the payments is greater than the lump sum. The lump sum today. It has greater earnings potential. 27
Rahul
Yang is considering buying an asset that, starting 5 years from now, will pay $10,000 per year forever. Assume that the required return is 7.25%. What is the most Yang should pay for this asset?
Assume you just received a monetary gift of $1,000, and decided to invest it in a certificate of Deposit (CD) for 5 years, at a steady annual yield of 3.5 percent. How much would be the total value of your investment at the maturity date?
2. The Electric Company is considering the purchase of a hillside ranch for possible use as a windmill farm sometime in the future. The owner of the 800-acre ranch will sell $4000 per acre if the company will pay her in two payments - one payment now and another that is twice as large 4 years from now. If the transaction interest is 12% per year, what is the amount of the first payment?

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS