If you want to install water system in your house to collect the rain water: a. If the water supply company charges you now $25 every month for service and $10 for water fees. b. The plan is to keep the house for 10 years. c. The house water system will cost you $4,500. d. If this system will supply all the water the house uses, and you will not be in need to the water supply company anymore. 1. What is the IRR % (.........) 2. Yes or no, based on IRR is this a good investment (.............)

If you want to install water system in your house to collect the rain water: a. If the water supply company charges you now $25 every month for service and $10 for water fees. b. The plan is to keep the house for 10 years. c. The house water system will cost you $4,500. d. If this system will supply all the water the house uses, and you will not be in need to the water supply company anymore. 1. What is the IRR % (.........) 2. Yes or no, based on IRR is this a good investment (.............)

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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Similar questions

Robert Jones and his wife Suzie recently opened an investment account with the intention of saving enough to purchase the house of their dreams, a beautiful, little white house on the corner of Michigan Avenue and Maple Street. Their goal is to have $45,000 down in five years. Their account will guarantee them a return of 8% compounded annually. How much do they need to put into the account right now to reach their objective? $46,778.96 $39,546.09 $51,214.75 $30,626.24
Give me right solution
You own a house that you rent for $1,200 a month. The maintenance expenses on the house average $200 a month. The house cost $89,000 when you purchased it several years ago. A recent appraisal on the house valued it at $120,000. The annual property taxes are $5,000. If you sell the house you will incur $25,000 in expenses. You are deciding whether to sell the house or convert it for your own use as a professional office. What value should you place on this house when analyzing the option of using it as a professional office?
You are the owner of a small bar, The World, and you are considering opening a bakery in a vacant area in the back of the store. You estimate that it will cost you $52,175.00 to set up the bakery and that you will generate $10,758.00 in after-tax cash flows in for the life of the store (which is expected to be 10 years.) The one concern you have is that you have limited parking; by opening the bakery you run the risk of not having enough parking for customers who enjoy your bar. You estimate that the lost sales would amount to $3,230.00 per year and that your after-tax operating margin on sales at the bar is 54.00%. If your discount rate is 14.00%, what is the NPV of opening the bakery?
Kaleo has made up his mind—he wants a pool in the family’s backyard! He figures his kids and spouse will be thrilled. However, to cover the cost of the pool, they’ll have to pack up and live away from home for a few weeks during the summer to rent their home to vacationers. He crunched the numbers based on the following estimates. 1. Cost of pool/installation $50,000 2. Life of the pool (no salvage value) 20 years 3. Annual net cash inflows from renting (net of cash expenses for renting and pool maintenance) $6,500 4. Tax rate 23% 5. Average rate of return 8% Kaleo’s daughter, Sarah, found the above information written on a sheet of paper in his office, along with the following notes. “This is a no-brainer! We’ll recover the cost of this pool in just 7 years, even though we plan to live here until we’re old and gray, or at least as long as the pool hangs on. If we can rent our house out for just 3 weeks each year, it’ll be almost pure profit that we can put toward paying off…
solve the following problem: His father has asked him to advise him on remortgaging the house (remortgaging means taking out a new loan to pay for the house, depending on the fact that the value of the house has risen and they give him a loan for a greater amount). The house was purchased about 8 years ago at an initial value of $140,000 and a rate of 5.5% per year compounded monthly for twenty years. When performing a revaluation of the house the market value is $185,000. Therefore, a bank offers him an offer of 5.25% annual capitalized weekly to pay off the outstanding debt of the house and 6.5% annual capitalized daily to cover debts that his father has in credit cards and loans, the term would be for a few 15 more years (both loans). His father has a debt in cards in the order of $45,000 and you want to know how much they would lend you to cover the cards, since due to market conditions they only offer you a maximum amount of 80% of the market value of the house.
Installing a solar panel system on your roof comes with a total upfront cost of $18,000 after all tax credits. If the solar panels reduce your utility bill by $1000 per year, what is the Payback Period of installing the solar panel system? Round to one decimal place. Numeric Answer:
--you live in the mobile home for four years, but your roommate also pays you $3,000 a year, paid to you at the beginning of each year. The cost of the mobile home is $15,000, paid immediately. At the end of four years, you can sell the mobile home for $9,000. You have no maintenance on the home because you were such a smart manager Using Present Value, what is the cost of your college housing (positive or negative), assuming an interest rate of 8%?
You decide to do some remodeling in the kitchen. Your parents agree to lend you the money, but you insist on paying them interest. The agreement is that they will lend you $8000.00 at a simple interest rate of 2% per year. Once the interest amounts to $480, you agree to pay them back the $8000 plus the $480 interest. After how many months will you have to pay them back? Please answer step by step
You run a school in Florida. Fixed monthly cost is $5,689.00 for rent and utilities, $5,807.00 is spent in salaries and $1,772.00 in insurance. Also every student adds up to $93.00 per month in stationary, food etc. You charge $710.00 per month from every student now. You are considering moving the school to another neighborhood where the rent and utilities will increase to $11,056.00, salaries to $6,925.00 and insurance to $2,056.00 per month. Variable cost per student will increase up to $177.00 per month. However you can charge $1,053.00 per student. At what point will you be indifferent between your current mode of operation and the new option? Submit
am. 136.
Suppose a man took out a 30-year loan with an annual rate of 6% to put an addition on his house. His banker encouraged him to put other expenses into the loan if he wished, so he increased the loan in order to purchase furniture, a new car, and a computer. Suppose the computer cost $1,200. Assume that the loan is an add on loan to calculate parts a. and b. a. What was the amount of interest that he paid on the computer part of his loan? b. What was the total cost of his computer? a. The total interest is $ (Simplify your answer.) (CCS)

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