Razak has some property for sale and has received two offers. The first offer is for RM89,500 today in cash. The second offer is the payment of RM35,000 today and an additional guaranteed RM70,000 two years from today. If the applicable discount rate is 11.5 percent, which offer should he accept and why? (assuming no cost involved)   Select one: A. Kumar should accept the second offer today because it has the lower future value B. Kumar should accept the first offer today because it has the higher present value C. Kumar should accept the second offer because it has the higher present value D. Kumar should accept the first offer as it is a lump sum payment

Q: The buyer of a piece of real estate is often given the option of buying down the loan. This option…

A: When the lender offers a loan to the borrower, he charges an interest rate on the borrowed amount…

Q: The minimum down payment to obtain the best financing rate on a house is 20%. Assuming that John has…

A: Best financing rate = 20%/100 = 0.20 in decimalsAmount set aside = $27,000Explanation:To find the…

Q: Robin Williams has just purchased some equipment for his business. For this equipment he must pay…

A: In finance and investment analysis, Present Value refers to the current worth or value of a future…

Q: The buyer of a piece of real estate is often given the option of buying down the loan. This option…

A: “Hey, since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: You have the option to take a lump sum payout of $10,000 or take $1000 annually for 8 years. Which…

A: You have 2 option :(1) Take lump sum amount of $10,000 today0r (2) take $1000 annually for 8 years

Q: You have the opportunity to buy a perpetuity which pays $374,908. Your required rate of return on…

A: A perpetuity is a financial instrument or investment that provides a constant, unending stream of…

Q: As a prize, you are offered of one of the following three options: Option 1: $6,000 today, or Option…

A: Time value of money:   The value of money changes over a period time. The value of money depends on…

Q: You won a raffle while you were down the shore with friends. For your prize, you can choose among…

A: Given the following information: Future value: $75,000 Discount rate: 8% Time period: 4 years

Q: The buyer of a piece of real estate is often given the option of buying down the loan. This option…

A: Financing through loan is the acquisition of required funds through the mode of loans i.e. debt that…

Q: Jeffersons are considering selling their current residence, buying a small home near Avery’s parents…

A: Mortgage loans are very common when buying homes and these secured loans against home as collateral…

Q: Mary is in contract negotiations with a publishing house for her new novel. She has two options. She…

A: Initial Cash Flow = 100,000Option 1 :Cash flow for the Next 5 years : 26000Discount rate 8%Option 2…

Q: (c) If Darrell chooses the 3-point 9.25% loan, what will be his total outlay in points and payments…

A: Downpayment = 10% of Cost of building                          = $983,000*10%…

Q: If offered the choice of receiving $500 today or $500 in five year's time, which option would you…

A: The concept of present and future value comes from considering the change in the value of money with…

Q: Mark is selling a well-established fishing business. A potential buyer is offering $150,000 in one…

A: Offer value" means cost or price related to a good or service that a company is providing to its…

Q: You plan to buy a new car. The car dealer offers the following two options: Opt

A: Given, Option A: $12,000 for 3 years Option B: $1000 per month for 3 years.

Q: The buyer of a piece of real estate is often given the option of buying down the loan. This option…

A: Discount points are the optional fees over the agreed interest rate that a borrower has to pay to…

Q: Erik is an investor with $5,000 available for investment. He has the following three investment…

A: The question is asking us to determine the risk preferences of two individuals, Erik and Devin,…

Q: 2. Amy is choosing between two apartments. Apartment A is selling at ¥ 9 million, and apartment B is…

A: In capital budgeting analysis, when the cash stream that is related to future is converted to…

Q: You are negotiating the terms of a legal settlement. You have been given several different…

A: Present Value means value of future benefits at the current date. It is calculated by dividing 1+r…

Q: Which of these would you choose? In order to solve this, you need to make everything into its…

A: Time value of money considers the value of money in present is more worth than in future. For…

Q: Suppose that you expect to receive an inheritance of £10,000 in one year. You will want to put this…

A: A Forward Rate Agreement (FRA) is a financial derivative that enables parties to lock in a…

Q: You have two job offers with the following 6-year compensation terms: the first one offers you…

A: Offer 1 Amount of Compensation every Yera = $ 80,000 Total Years = 6 Rate of Interest(r) = 12%

Q: Allison has a golden goose that will lay an egg every year until forever. The first egg will be out…

A: Allison's golden goose will lay an egg every year until forever.The value of each egg is $500.The…

Q: You have some property for sale and have received two offers. The first offer is for $189,000 today…

A: According to the financial principle known as "the time value of money," a certain amount of cash…

Q: s and what rate is optimal is often a matter of how long the buyer intends to keep the property.…

A: a) Computation of amount being financed is shown as follows: B4 f x =B2-B3   (A) (B)…