Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years fromtoday. The annual discount rate for these investments is 15%. The following table summarizes the initial cost and the sale price in three years foreach property:Sale Price in Three YearsParkside AcresCost Today$470,000860,000$930,000Real Property Estates1,420,000Lost Lake Properties680,0001,080,000Overlook170,000350.000Kartman has a total capital budget of $860,000 to invest in properties. Which properties should it choose?The profitability index for Parkside Acres is(Round to two decimal places.)

Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 15%. The following table summarizes the initial cost and the sale price in three years for each property: Cost Today $470,000 860,000 680,000 170,000 Sale Price in Three Years $930,000 1,420,000 1,080,000 350.000 Parkside Acres Real Property Estates Lost Lake Properties Overlook Kartman has a total capital budget of $860,000 to invest in properties. Which properties should it choose? The profitability index for Parkside Acres is (Round to two decimal places.)

Kartman Corporation is evaluating four different real estate investments. Management plans to buy the properties today and sell them three years from today. The annual discount rate for these investments is 15%. The following table summarizes the initial cost and the sale price in three years for each property: Cost Today $470,000 860,000 680,000 170,000 Sale Price in Three Years $930,000 1,420,000 1,080,000 350.000 Parkside Acres Real Property Estates Lost Lake Properties Overlook Kartman has a total capital budget of $860,000 to invest in properties. Which properties should it choose? The profitability index for Parkside Acres is (Round to two decimal places.)

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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RadCo is considering two projects. The first, project A. has $400,000 income after the first year which increases by 8% each year for a total of 5 years. Project B has $450,000 income after the first year which increases by $25,000 each year for a total of 5 years. RadCo can only choose one project. Based on present worth today, which project should RadCo choose? The interest rate is 6% annual compounded annually.
mni.9
Torbet Fish Packing Company wants to accumulate enough money over the next 10 years to pay for the expected replacement of its digitalized, automated scaling machine. The new machine is expected to cost $150,000 in 10 years. Torbet currently has $13,000 that it plans to invest over the next 10 years to help pay for the new machine. Torbet wants to put away an equal, end-of-year amount into a sinking fund investment account at the end of each of the next 10 years. Earnings on all of the investments are expected to be 7 percent for the first five years and 9 percent thereafter. What equal, end-of-year amount must Torbet save each year over the next 10 years to meet these needs?
The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Operating Net Cash Year Income Flow 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 4 18,750 93,750 5 18,750 93,750 The cash payback period for this investment a. 4 years Xb. 3 years c. 5 years d. 20 years
Central Mass Ambulance Service can purchase a new ambulance for $200,000 that will provide an annual net cash flow of $50,000 per year for five years. The salvage value of the ambulance will be $25,000. Assume the ambulance is sold at the end of year 5. Calculate the NPV of the ambulance if the required rate of return is 9%. (Round your answer to the nearest $1.) A) $(10,731) B) $10,731 C) $(5,517) D) $5,517
help defray the expected cost expense of a complete plant renovation in 20 years, a company deposits R5000 at the end of each year in a sinking fund which credits interest at 5% effective. After 8 years of such payments, rising costs of material and labor lead the directors to increase the annual deposits to R7500. How much will the fund contain at the end of 20 years?
The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 1 2 $18,750 18,750 18,750 18,750 18,750 The average rate of return for this investment 3 4 Operating Income 5 Net Cash Flow $93,750 93,750 93,750 93,750 93,750
Vijay
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The Salt Store is evaluating a capital expenditure proposal with the following predicted cash flows: Initial investment $(75,000) Operations, each year for four years 25,000 Salvage 8,000 The accounting rate of return on the initial investment presented is:
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Grady Corporation is considering the purchase of a new piece of equipment. The equipment costs $51,100 and will have a salvage value of $5,120 after 9 years. Using the new piece of equipment will increase Grady's annual net cash flows by $6,090. Grady's cost of capital is 15%. (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1) Note: Use appropriate factor from the PV tables. Required: a. What is the present value of the increase in annual cash flows? b. What is the present value of the salvage value? c. What is the net present value of the equipment purchase? d. Based on financial factors, should Grady purchase the equipment? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D What is the present value of the increase in annual cash flows? Note: Round your answer to the nearest whole dollar. Present Value Required B >

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