McDonald's major distribution partner, The Martin-Brower Company, needs at least $1 million to build a new warehouse in Medicine Hat 2 years from today. To date, it has invested $500,000.00. If it continues to invest $46,000.00 at the end of every quarter into a fund earning 6% quarterly, will it have enough money to build the warehouse 2 years from now? How much money will it have? The Martin-Brower Company's $500,000.00 will have grown to and its $46,000.00 deposits will have grown Thus, it ? ✓ have enough money 2 years from now. to for a total of

McDonald's major distribution partner, The Martin-Brower Company, needs at least $1 million to build a new warehouse in Medicine Hat 2 years from today. To date, it has invested $500,000.00. If it continues to invest $46,000.00 at the end of every quarter into a fund earning 6% quarterly, will it have enough money to build the warehouse 2 years from now? How much money will it have? The Martin-Brower Company's $500,000.00 will have grown to and its $46,000.00 deposits will have grown Thus, it ? ✓ have enough money 2 years from now. to for a total of

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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1. A consulting firm is considering the purchase of a new computer system for their enterprise management needs. A vendor has quoted a purchase price of $240,000. The consulting firm plans to borrow one-fourth of the purchase price from a bank at 8% compounded annually. The loan is to be repaid in equal annual payments over a six year period. The remainder of the purchase price is available through other funding sources (e.g. not a loan or money that must be repaid). The time. computer system is expected to last eight years and has a salvage value of $8,000 at that During the 8-year period, the consultant firm also expects to pay a technician $25,000 per year to maintain the system but will also save an estimated $55,000 per year through increased efficiencies in operations. The consulting firm project manager has determined that a MARR of 12%/year should be used to evaluate this investment project. What is the external rate of return for the investment project? Should the new computer…
How many years will it take Rexchem, Inc., to accumulate $725,000 for a chemical feeder, if the company deposits $50, 000 each year, starting one year from now, into an account that earns interest at 10% per year? (Round up your answer to an integer value.) Rexchem, Inc., will take years.
You need to prepare for three large, upcoming project expenditures which will begin 3 years from now. The first required cash flow will be $56,000, the next year will require $94,000, and then $132,000. If you begin setting aside funds from your current budget next month, how much do you need to save each month in order to have enough to cover all three cash flows the day the first cash flow comes due? Assume you can invest these funds at 8.4 percent APR, compounded monthly. Please demonstrate how to calculate using a financial calculator, when possible.
The owners of a chain of fast-food restaurants spend $29 million installing donut makers in all their restaurants. This is expected to increase cash flows by $10 million per year for the next five years. If the discount rate is 6.2% were the owners correct in making the decision to install donut makers? O Yes, as it has a net present value (NPV) of $13 million. O No, as it has a net present value (NPV) of -$1 million. O No, as it has a net present value (NPV) of -$3 million. QYes, as it has a net present value (NPV) of $8 million.
A company estimates that it will need $52,000 in 18 years to replace a computer. If it establishes a sinking fund by making fixed monthly payments into an account paying 6.3% compounded monthly, how much should each payment be? FORES: O OF Save A company estimates that it will need $52,000 in 18 years to replace a computer. If it establishes a sinking fund by making fixed monthly payments into an account paying 6.3% compounded monthly, how much should each payment be?
Two years ago, Lou Marshall, Inc. deposited $18,125 in an investment account for the purpose of buying new equipment four years from today. Last year, it added another $20,212 to this account. The company plans on making a final deposit of $17,503 to the account today. How much will be available when it is ready to buy the equipment, assuming the company earns 13.27% APR on its invested funds? Choose the closest amount. $118,681.22 $92,502.23 $91,918.47 $104,777.28 $72,097.87
Dog Care Co. wants to finance a new animal shelter by making eight annual deposits into a fund earning 11% compounded annually. The first four deposits are to be $19,000 each and will be paid at the beginning of the next four years. The last four deposits are to be $27,000 each and will be paid at the beginning of the last four years. The cost of the new animal shelter amounts to:
Drexter's Shop wants to start a fund to accumulate half of the expected P600,000 cost of expanding their facilities in 8 years. What semiannually account must be paid into the fund earning 6% compounded quarterly in order to reach the target?
Vijay
Peaceful Cruises wants to build a new cruise ship that has an initial investment of $400 million. It is estimated to provide an annual cash flow over the next 10 years of $57 million per year. The discount rate is 5%. What is the discounted payback period? Enter your answer rounded to two decimal places
We are funding an organization for ten years. The first payment will be made one year from today (end of year one) and will be $8,350. Each year after that, the organization will receive payment from us annually. The payment will increase at a rate of 2% per year after the second payment. If the annual interest rate is 15%, what is the present value of this endowment?
You are the vice president of finance for a manufacturer of scuba diving gear. The company is planning a major plant expansion in 5 years. You have decided to start a sinking fund to accumulate the funds necessary for the project. Your company's investments yield 12% compounded quarterly. It is estimated that $4,000,000 in today's dollars will be required; however, the inflation rate on construction costs and plant equipment is expected to average 6% per year for the next 5 years. (a) Use the compound interest concept from Chapter 11 to determine how much (in $) will be required for the project, taking inflation into account. $ (b) What sinking fund payments (in $) will be required at the end of every 3-month period to accumulate the necessary funds? $

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