per year. Another option is to sell the land this year at its current market price of $80,000.The price of the land next year will be $78,000. If you sell it, your group has an investmentopportunity from which you expect to make a return of 6 percent per year. If you rent thefarm, what is the total return from renting the land?$5,000$7,000$4,800$2,000

The cost an organization must pay to use land as a production component for a certain amount of time…

Answered: per year. Another option is to sell the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 22P

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Similar questions

If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?
Washington-Pacific (W-P) invested $4 million to buy a tract of land and plant some young pine trees. The trees can be harvested in 10 years, at which time W-P plans to sell the forest at an expected price of $8 million. What is W-P’s expected rate of return?
You have an opportunity to purchase a piece of vacant land for $30,000 cash. If you plan to hold it for 15 years and then sell it at a profit. During this period, you would have to pay annual property taxes of $600 and have no income from the property. Assuming that you would want a 10% rate of return from the investment, a) Draw a cashflow diagram. b) What net price would you have to sell it in the next 15 years?
You are considering investing in a rental property. Market rent for similar properties is 1, 500 a month (18,000 a year). Maintenance costs, property tax and insurance add up to 4, 000 a year. You expect rent and cost to increase at 5% a year. You plan to hold the property for 10 years and expect to sell it at the end of 10 years for $250,000. How much should you pay for it now if you're asking for a return of 15% ?Question 13 options: $152, 134.01 $132, 058.94 $169, 321.37 $145, 426.88
You’re considering purchasing an apartment for $200,000. You believe that you can earn an initial rental income of $12,000 per year on it and that the rental income will grow at 3% per year. You also believe that you can sell the apartment for $225,000 after 5 years. The IRR calculation is shown below:
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An investment plan gives you 4 different options: Plan A: receive $325,000 today: Plan B: receive $20,000 for 25 years; Plan C: receive $10,000 per year for 25 years plus a one time payment of $100,000 in 25 years; or Plan D: receive $15,000 forever. If the current rate of return is 12%, what is the present value of Plan D? Above $300,000 $225,000 to $300,000 Below $75,000 $150,000 to $225,000 $75,000 to $150,000
An investor has an opportunity to buy a commercial property and to sell it after 15 years. Rents from the property will be $24,000 and he expects them to increase at a rate of 3% per year annually. His required rate of return on this investment is 12%. At what price would he be indifferent to buying or not buying the investment? Round off to the nearest $1. Select one: O a. $213,656 O b. $800,000 O c. $171,429 O d. $240,000
An investment will generate $9,000 a year for 20 years. If you can earn 9 percent on your funds and the investment costs $100,000, calculate the present value of investment. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it?-Select-YesNoItem 2 Calculate the present value of investment, if you could earn only 5 percent. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it in this case?-Select-YesNo
Suppose you invest $2,000 today and receive $11,000 in five years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $2,000 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the amount you will receive each year?
An investment will generate $12,000 a year for 30 years. If you can earn 12 percent on your funds and the investment costs $100,000, calculate the present value of investment. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it?-Select-YesNoItem 2 Calculate the present value of investment, if you could earn only 9 percent. Use Appendix D to answer the question. Round your answer to the nearest dollar.$ Should you buy it in this case?

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