5. Southwestern Moving and Storage wants to have enough money to purchase a newtractor-trailer in 3 years. If the unit will costs approximately $450,000 three years fromnow, how much should the company set aside each year if the account earns 4% peryear? Show your cash flow diagram.

Here, Cost of Tractor in three years (FV) is $450,000 Time Period (n) is 3 years Interest rate (r)…

Southwestern Moving and Storage wants to have enough money to purchase a new tractor-trailer in 3 years. If the unit will costs approximately $450,000 three now, how much should the company set aside each year if the account earns 4% per year? Show your cash flow diagram. years from

Southwestern Moving and Storage wants to have enough money to purchase a new tractor-trailer in 3 years. If the unit will costs approximately $450,000 three now, how much should the company set aside each year if the account earns 4% per year? Show your cash flow diagram. years from

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

You need $6,000 to buy new furniture. If you have $1,000 to invest today at 8% compounded annually, how long will you have to wait to buy furniture?
You estimate your monthly gas and maintenance expenses for your delivery vehicles will be $1,500 a month for the next 7 years. Assuming an interest rate of 5%, what is the present value of these costs?
Suppose you need $1,000 in one year and $2,000 more in two years. If you can earn 9%, how much do you need to put up today?
You started a business that takes $1,000,000 today. If the business produces $10,000,000 (just this cash only and nothing in between) in 20 years. If the interest rate is 10%, what is the value of the future cash flow from this investment today?
You own a building that is expected to pay annual cash flows forever. If the building is worth $2000000, the cost of capital is 5.0%, and annual cash flows are expected with the first one due in one year and all subsequent ones growing annually by 2.2%, then what is the amount of the cash flow produced by the building in 3 years expected to be?(Round the value to 0th decimal to get a whole number)
A neighborhood shopping center is expected to generate after-tax cash flow of $750,000 per year (at end of year) indefinitely. If an interested buyer has a cost of money of 13 %, how much will he be willing to pay for this shopping center? A $6.64 million B) $7.50 million $5.77 million D $2.21 million
Calculate the present value of the cash savings: Samson Inc. is contemplating the purchase of a machine that will provide it with the net after-tax cash savings of $100,000 per year for eight years. Interest is 10%. Assume the cash savings occur at the end of each year.
1. A mechanical device will cost $30,000 when purchased. Maintenance will cost $2,000 each year. The device will generate revenues of $5,000 each year for five years. At the end of the fifth year, the salvage value of the device is $6,500. Draw and simplify the cash flow diagram. Calculate: (a) the present value and (b) the equivalent annual cost of the cash flows using a discount rate of 12%.
A firm buys a new piece of equipment for $28,808, and will receive a cash flow of $3,700 per year for fourteen years. What is the IRR? (Use a Financial calculator to arrive at the answers. Round the final answer to the nearest whole percent.) IRR %
Jim Hayes wants to buy some electronic equipment for $800. Jim has decided to save uniformamount at the end of each month so that after 12 months he will have the required $800. If theinterest rate is 0.5% per month (a) Construct a cash flow diagram (b) determine how much Jim has to deposit each month by using tabulated factors
If a person spends $12 a week on coffee (assume $600 a year), what would be the future value of that amount over 10 years if the funds were deposited in an account earning 3 percent?
Using the BA II Plus how do I find the solution to The Humpty Dumpty Food Store will be setting aside 35,000 each quarter starting next quarter, for the next four years. How much money will the firm have in four years if it can earn 6.25 % on its savings?

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