Kermit is considering purchasing a new computer system. The purchase price is $141,209. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $8,406 at that time. Over the 5-year period, Kermit expects to pay a technician $20,000 per year to maintain the system but will save $63,788 per year through increased efficiencies. Kermit uses a MARR of 12 percent to evaluate investments. What is the net present worth for this new computer system? Enter your answer in this format: 12345

Kermit is considering purchasing a new computer system. The purchase price is $141,209. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $8,406 at that time. Over the 5-year period, Kermit expects to pay a technician $20,000 per year to maintain the system but will save $63,788 per year through increased efficiencies. Kermit uses a MARR of 12 percent to evaluate investments. What is the net present worth for this new computer system? Enter your answer in this format: 12345

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

Blackstone Company purchased a new software system costing $35,000. To finance the purchase, Blackstone signed a contract agreeing to pay the cost over the next 8 years, with a payment due every six months; the first payment will be made six months from the date of purchase. Blackstone's usual interest rate is 10%. What is the amount of the payment required (rounded to the nearest dollar)? 's usual 096, What is the amount of the Select one: O a. 16,030 O b. 6,560 O c. 3,229 d. 2,575 e. None of the above
A small business has determined that the machinery they currently use will wear out in 17 years. To replace the new machine when it wears out, the company wants to establish a savings account today. If the interest rate on the account is 1.1 percent per quarter and the cost of the machinery will be $255,000, how much will the company have to deposit today?
You have decided to buy a car this year at a price of $18,000. You're planning to take out a loan for the full price of the vehicle at an interest rate of .5% per month. For the first two years (24 months), you decide to repay $600 per month. How much will you have to pay each month for the remainder of the three-year loan (12 months remain) to exactly pay off the car in full at the end of the three-year term? Hint: Consider the monthly interest rate, the number of periods in months, and the monthly cash flows. $433 $500 $443 $600 O $419
Emerson developed a new style of camping trailer. He is considering a licensing agreement with Easy-Tow, who will manufacture the new trailer. They are proposing to pay him $36,000 now, and $18,000 at the beginning of each of the eleven years of the licensing agreement, starting in two years. If interest is 5.35% compounded semi-annually, what is the agreement worth today? The agreement is worth $ today. (Round the final answer to the nearest cent as needed. Round all intermediate values to six decimal places as needed.)
Kermit is considering purchasing a new computer system. The purchase price is $131,870. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year compounded annually. The loan is to be repaid using equal annual payments over a 3-year period. The computer system is expected to last 5 years and has a salvage value of $7,452 at that time. Over the 5-year period, Kermit expects to pay a technician $20,000 per year to maintain the system but will save $78,952 per year through increased efficiencies. Kermit uses a MARR of 12 percent to evaluate investments. What is the net present worth for this new computer system? Enter your answer in this format: 12345
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?
A new home was purchased in Niagara Fall’s Butler Heights subdivision for $375,000 by Karen. The house is going to be financed by making a down payment of 15% and financing the balance with a conventional mortgage. The mortgage is to be amortized over 20 years with weekly payments. The rate chosen for the first four years of the mortgage is 2.79% compounded semi-annually. Show all work with formulas a) Determine the size of the weekly payments? b) What will the outstanding balance be after the first four years? c) Determine the size of the new weekly payment if after the first four year term she renews the mortgage using a fixed rate of 2.04% compounded semi-annually.
An asset was issued 11 months ago. The asset promised to make semi-annual payments (one payment every six months) of $80 each, from the date of issuance, for two years. All payments are equally risky and thus they have the same discount rate. You've decided that the discount rate is 12%. According to these numbers, how much is the asset worth to you today? Round your answer to the NEAREST DOLLAR.
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?
The Claussens are considering the purchase of a hardware store. The Claussens anticipate that the store will generate cash flows of $83,000 per year for 20 years. At the end of 20 years, they intend to sell the store for an estimated $530,000. The Claussens will finance the investment with a variable rate mortgage. Interest rates will increase twice during the 20-year life of the mortgage. Accordingly, the Claussens' desired rate of return on this investment varies as follows: Years 1-5 Years 6-10 Years 11-20 Required: 8% 10% 12% What is the maximum amount the Claussens should pay for the hardware store? (Assume that all cash flows occur at the end of the year.) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) PV of $83,000 cash flow PV of $530,000 selling price Maximum paid for store Years 1-5 Years 6-10 $ 331,395…
Michael Security has learned that a rival has offered to supply a parking garage with security for ten years for $45,000 up front and a further $15,000 per year. Michael Security offers to provide security for eight years for an upfront cost of $60,000 and a separate yearly payment. What should the yearly payment be so that Michael's offer matches the equivalent annual annuity of their rival's offer? (Assume a cost of capital of 5%.)

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