Question 173Suppose that a property can generate cash flows of $5,880 per year for 8 years and cansell for $70,690 at the end of the investment period. Assuming a discount rate of 7%compounded annually, what is the present value of this property (Assume end of periodcash flows in your calculation)?

Step 1: Calculate the present value of the annual cash flows.The cash flows are $5,880 per year for…

Answered: Question 17 3 Suppose that a property…

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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son.5
QUESTION 10 Beatrice owns two investments, A and B, that have a combined total value of $28,100.00. Investment A is expected to pay $25,180.00 in 4 years from today and has an expected return of 12.77 percent per year. Investment B is expected to pay $21,594.06 in 5 years from today and has an expected return of R per year. What is R, the expected annual return for investment B? O 11.50% (plus or minus 10bps) O 14.58% (plus or minus 10bps) O 10.73% (plus or minus 10bps) O 9.50% (plus or minus 10bps) O none of the answers are within 10bps of the correct answer
Assignment 3 Ch.5 Name / ID/ Section / Q1/ Ipswich Corporation is investment opportunity with the expected net cash inflows of $300,000 for four years. The residual value of the investment, at the end of four years, would be $70,000. The company uses a discount rate of 14%, and the initial investment is $290,000. Calculate the NPV of the investment. considering an Present value of an ordinary annuity of $1: 12% 13% 14% 15% 0.893 0.885 0.877 0.87 1.69 1.668 1.647 1.626 2.402 2.361 .322 2.283 3.037 2.974 2.914 2.855 Present value of $1: 12% 13% 14% 15% 0.893 0.885 0.877 0.87 Q2/ A company is evaluating an investment. The company uses the straight-line method of depreciation. Use the following information to compute the accounting rate of return. Show your calculations and round to one decimal place. Project SR875,000 Investment Residual value Operating income Year I 120,000 Year 2 120,000 Year 3 120,000 Year 4 120,000 Year S Q3/ Your grandfather would like to share some of his fortune…
1.4 The table represents the cash flows received from the investments at the end year. Each investment requires an initial investment of $1000. Answer the questions related to the two investment opportunities in the table below. Year 1 2 3 4 5 Investment A 225 215 250 225 205 Investment B 220 225 250 250 210 There are two approaches to evaluate this investment. Show the necessary calculations. • Assume the interest rate ot 4.33%. Use present value analysis to determine which investment you should choose? Calculating the rate of returns of the investment, which investment would you choose and why?
2.2 How long would it take R50 000 invested today at a compound interest rate of 6.25% per annum to reach an investment goal of R80 000
Question 6 Consider a series of cash flows as follows: £750 received one year from now, £1,200 received three years from now, and £1,250 received six years from now. If the discount rate is 6%, to the nearest £0.01 what is the (i) present value of the cash flows and (ii) the future value in ten years of the cash flows? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a (i) £2,596.29 and (ii) £4,386.38 b (i) £2,395.41 and (ii) £4,289.41 (i) £2,596.29 and (ii) £4,649.56 None of the above (1) £2,395.41 and (ii) £4,046.99
Question content area top Part 1 (Present value of a growing perpetuity) Your firm has taken on cost saving measures that will provide a benefit of $10,000 in the first year. These cost savings will decrease each year at a rate of 4 percent forever. If the appropriate interest rate is 6 percent, what is the present value of these savings? Question content area bottom Part 1 The present value of these cost savings is $enter your response here. (Round to the nearest cent.)
QUESTION 3 A company has the project cashflow presented in the table below. If the inflation-free interest rate is 12% per year and the inflation rate is 4% per year, determine the Present Worth of the company's cashflow. Cashflow Item Amount First Cost -18,000 Annual Operating Cost Salvage Value No. of Years -7500 5000 10
Chapter 10 Discussion Q1 A property is sold for $200,000. Typical financing terms are an 85 percent loan with a 10 percent interest rate over 15 years. If the gross income per year is $30,000, what is the overall capitalization rate?
Question 6.29 The following three sets of cash flows have the same present value: 10,000 payable in 1 year 1,200 at the end of each year for 12 years, with the first payment to be made in one year . X per year, with the first payment to be made in 20 years and the final payment to be made in 30 years The force of interest is constant. Calculate X. A 281 B 4,971 C 5,299 D 5,341 E 5,693
QUESTION 42 Compute the missing variable for each of the following alternatives of investments to accumulate $1,000,000. for 30 years @ 6% annual interest rate: Following are appropriate factors from tables: Table % / n Present Value of annuity due $1 Present Value of ordinary annuity of $1 Present value of $1 Future Value of ordinary annuity of $1 6%/30 12.15812 13.76483 .17411 79.05819 $????????? invested annually at the end of the year. Required Computations: $12,648.91 $72,648.92 $33,3333.33 $11,927.43
plz answer question 3.

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