Pablo has an opportunity to make two investments, but he can only afford to make one of them. Each one costs $25,000. The mist investment can be sold in 15 years for $98,500 and has no periodic cash flow (use annual compounding). The second investment has a $200 per month cash flow for 6 years followed by cash flow of $400 per month for 8 years. The second investment has no resale value. Which investment is better, from the standpoint of highest IRR? Round to the nearest hundredths. (enter as a % with no % sign) Investment 1 IRR = Investment 2 IRR = 9.57 You are correct 10.67 X

Pablo has an opportunity to make two investments, but he can only afford to make one of them. Each one costs $25,000. The mist investment can be sold in 15 years for $98,500 and has no periodic cash flow (use annual compounding). The second investment has a $200 per month cash flow for 6 years followed by cash flow of $400 per month for 8 years. The second investment has no resale value. Which investment is better, from the standpoint of highest IRR? Round to the nearest hundredths. (enter as a % with no % sign) Investment 1 IRR = Investment 2 IRR = 9.57 You are correct 10.67 X

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

A local entreprenuer asks you to invest $10,000 in a business venture. Based on your estimate, you would receive nothing for three years at the end of the four you would receive $4900, and at the end of year five you would receive $14500. If you estimates are correct, what would be the IRR on this investmenet?
Jerry wants to take the next three years off work to travel around rhe world. he estimates his annual cask needs at $35,000. Jerry believes he can invest his savings at 6% until he depletes his funds. Present value annuity at 6% for 3 years is 2.6730 (present value interest factors for a one-dollar annuity discounted) Requirements: how much money does jerome need now to fund his travels?
I dont need an answer to the problem. I just want to understand how is this a Present Value of an Annuity problem. I don't see any perodic payments being made so I'm a little confused.
Derek decides to buy a new car. The dealership offers him a choice of paying $518.00 per month for 5 years (with the first payment due next month) or paying some $28,412.00 today. He can borrow money from his bank to buy the car. What interest rate makes him indifferent between the two options? Submit
Duke was approved for a 30 year conventional loan for $250,000 at 3.65% fixed rate. He was also approved for a 15 year conventional loan for $250,000 at 3.45% fixed rate. He has $20,000 to put as a down payment. He has to pay insurance of $1400 a year and property tax of $2500 a year. Use time value of money to figure out the best options for Duke. To avoid PMI (at least 20% down) what amount would Duke have to put down if he wants to take out the full amount of the loan ($250,000)?
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely.
Bill needs a new car and can afford monthly car payments of $400. The interest rate on new car loans is 7% APR and payments are made at month end. Bill wonders whether to arrange a 48 or 60 month loan. With either loan Bill will borrow the maximum amount and buy the most expensive car possible. The average annual rate of depreciation of a car's value is 18%. Bill can invest his spare cash in a mutual fund expected to pay 5%, Compounded monthly. Bill will keep whichever car he buys for 5 years. a.) What is the maximum he can spend on a car if he arranges a 48 month loan? What if he arranges a 60 month loan? b.) Compare Bill's wealth (the value of his car plus his investments) after 5 years if he arranges a 48 month loan to his wealth if he arranges a 60 month loan.
You want to buy a house that costs $280,000. You have $28,000 for a down payment, but your credit is such that mortgage companies will not lend you the required $252,000. However, the realtor persuades the seller to take a $252,000 mortgage (called a seller take-back mortgage) at a rate of 6%, provided the loan is paid off in full in 3 years. You expect to inherit $280,000 in 3 years, but right now all you have is $28,000, and you can afford to make payments of no more than $19,000 per year given your salary. (The loan would call for monthly payments, but assume end-of-year annual payments to simplify things.) a. If the loan was amortized over 3 years, how large would each annual payment be? Do not round intermediate calculations. Round your answer to the nearest cent. $ Could you afford those payments? -Select- b. If the loan was amortized over 30 years, what would each payment be? Do not round intermediate calculations. Round your answer to the nearest cent. $ Could you afford those…

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