Answered: The value of a car that is t years old…

The value of a car that is t years old can be modeled by V(t)= 420,000(0.965)^t .what would be the car's worth in 2 years time? How many years will the car be worth $325,000?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 9EB: If you invest $15,000 today, how much will you have in (for further instructions on future value in...

See similar textbooks

Related questions

Q: You buy a house that costs $10,000. Its annual maintenance cost = $100/year. After 5 years, you can…

A: Given: Initial cost = $10,000 Maintenance cost = $100 Years = 5 Year 5 sale value = $20,000

Q: CircleCo is considering the purchase of new construction crane, which would cost approximately…

A: Capital budgeting refers to the concept used for evaluating the viability of the project which is…

Q: Your landscaping company can lease a truck for $8,200 a year (paid at year-end) for 5 years. It can…

A: Lease price of the truck = 8200 lease period = 5 years Purchase price of the truck = $35000 Life = 5…

Q: Case study a. Let's say your friend offer simple investment. You are planning to buy an asset for RM…

A: Rate of return is the amount of profit earned on the investment and this is the percenatge of the…

Q: You currently have $8,700 to invest. You can invest the full amount now for a period of 9 years at…

A: Final Value after 9 years = $15,000Initial Value = $8,700Number of years (n) = 9

Q: 2.52. Suppose you buy a machine and you have the option of paying the full price, $40,000, now; or…

A: In the given problem we require to calculate implied interest rate which makes the following two…

Q: ou want to invest $1000. List at least two terms (variables) you would consider regarding your…

A: When you investment in the market than future value of your investment includes the amount being…

Q: What is the relationship between present value and future value?

A: Future Value : FV is that value which will be received in near future. Present Value : PV is that…

Q: You have been offered a unique investment opportunity. If you invest $8,300 today, you will receive…

A: Net present value (NPV) is the difference between present value of all cash inflows and initial…

Q: You are considering investing RM61000 in new equipment. You estimate that the net cash flows will be…

A: Annual capital cost is nothing but depreciation calculated by the straight-line method. The salvage…

Q: t=1/2 you have $1300

A: Initial investment at t=0: $1000Additional investment at t=1/2: $5000Account balance at t=1/2:…

Q: You can buy property today for $2.1 million and sell it in 6 years for $3.1 million. (You earn no…

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

Q: Economics Margaret has a project with a £ 24,000 first cost that returns £ 4,900 per year over its…

A: Annual worth The difference between the costs and benefits a project incurs over its lifetime is…

Q: If a particular investment will pay $500, 5 months from now, and an additional $500, 9 months from…

A: Present value of future amount is computed as follows:-PV= wherePV= present valueFV = future valuer=…

Q: You are evaluating a project that will cost $502,000, but is expected to produce cash flows of…

A: 1. Pay back period is the length of time required to recover the cost of Investment. It is…

Q: What does the IRR rule say about whether the investment should be undertaken? What about the NPV…

A: Capital budgeting is a fundamental financial procedure in which organizations evaluate and select…

Q: You can buy property today for $3.9 million and sell it in 5 years for $4.9 million. (you have no…

A: Time value concept Receiving value today has more value than that of receiving the amount in the…

Q: You can buy property today for $2.0 million and sell it in 4 years for $3.0 million. (You earn no…

A: The value that is determined after compounding the present value over interest rates are known as…

Q: K You have been offered a unique investment opportunity. If you invest $11,300 today, you will…

A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…

Q: Suppose you are offered an investment opportunity that will pay $2,500 in five years if you invest…

A: We need to use equation below to calculate the annual rate of return of investment.WhereFVn = future…

Q: You estimate that you can save $9,000 by selling your home yourself rather than using a real estate…

A: To determine the future of a single payment we need to get a Future Value Interest Factor (FVIF).…

Q: You are considering a risk-free investment that costs $4000 and pays $5000 in one year. You can…

A: The difference between the current value of cash inflows and outflow of cash over a period of time…

Q: Ramson Corporation is considering purchasing a machine that would cost $510,510 and have a useful…

A: The payback period is the time it takes for an investment to generate cash flows equal to its…

Q: You would like to buy a new car. The car costs will be $81 500. If you can earn 12% per annum, how…

A: Future value of car = $81,500 Interest Rate = 12% per annum Time period = 3 years Here, the…

Q: Find the present worth at time 0 of the chrome plating costs shown in the cash flow diagram. Assume…

A: This question is related to capital budgeting.

Q: will it cost at that time.

A: This problem involves the calculation of future value which is given by the following formula: FV =…

Q: You are thinking of building a new machine that will save you $1,000 in the first year. The machine…

A: First year saving = $ 1000 Growth rate = -3% Interest rate = 5%

Q: Your landscaping company can lease a truck for $9,000 a year (paid at year-end) for 7 years. It can…

A: Given the following information: Lease value of truck - $9,000 a year (paid at year-end) for 7…

Q: You are considering a safe investment opportunity that requires a $710 investment today, and will…

A: Minimum acceptable rate of return It is the lowest rate of return which a project must be…

Q: You can buy property today for $3.1 million and sell it in 6 years for $4.1 million. (You earn no…

A: Since you have posted a question with multiple parts, we will solve first three subparts for you. To…

Q: A news article forecasts that it will cost around $36,871 to purchase a Lexus NX300 in 2024. How…

A: Future value of money is the sum of deposit done and amount of interest accumulated over the period…

Concept explainers

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

The value of a car that is t years old can be modeled by V(t)= 420,000(0.965)^t .what would be the car's worth in 2 years time? How many years will the car be worth $325,000?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

The price of a car you want is $36,000 today. Its price is expected to increase by $1000 each year. You now have $22,000 in an investment account, which is earning 8% per year. How many years will it be before you have enough to buy the car without borrowing any money? (Use Goal Seek to determine the time taken.) The time taken is determined to be..... years.
The price of a car you want is $42,000 today. Its price is expected to increase by $1000 each year. You now have $25,000 in an investment account, which is earning 10% per year. How many years will it be before you have enough to buy the car without borrowing any money? Solve by (a) trial and error, and (b) by spreadsheet.
Suppose you want to purchase equipment costing $500 and which will give you a cash flow of $35 every year. The equipment has a useful life of 7 years. Every year the equipment's price decreases by 34% and the discount rate is 4%. What is the NPV of the equipment if you purchase it now and when should you buy the equipment
Consider an asset that costs $120 today. You are going to hold it for 1 year and then sell it. Suppose that there is a 25 percent chance that it will be worth $100 in a year, a 25 percent chance that it will be worth $115 in a year, and a 50 percent chance that it will be worth $140 in a year. What is its average expected rate of return? Next, fifi gure out what the investment’s average expected rate of return would be if its current price were $130 today. Does the increase in the current price increase or decrease the asset’s average expected rate of return? At what price would the asset have a zero rate of return?
You can buy property today for $3.9 million and sell it in 5 years for $4.9 million. (you have no rental income on the property). 1. If the interest rate is 8% what is the present value of the sales price? 2. Is the property investment attractive to you? 3. What is the present value of the future cash flows if you are could earn $290000 per year rent on the property? The rent is paid at the end of each year. 4. Is the property investment attractive to you now?
An example of how to calculate net present value is done using the following. Imagine you have been given an investment opportunity wherein if you invest $1,200 today, you will receive $650 dollars at the end of each year for the next 5 years. You could separately choose to invest your money at 10% interest each year. Should you take the investment opportunity? To find the answer, use the NPV formula:
Using a financial calculator, You can buy property today for $2.1 million and sell it in 6 years for $3.1 million. (You earn no rental income on the property.) If the interest rate is 11%, what is the present value of the sales price?
(Use Calculator or Formula Approach) Suppose you need $10,000 in one year for the down payment on a new car. If you can earn 7% annually, how much do you need to invest today?
A new machine will cost $2,000, but it will result in savings of $500 per year. What is the payback time in years?
Suppose you buy a machine and you have the option of paying the full price, $40,000, now; or $10,000 at the end of each of the next five years. What is the cost of capital, or the implied interest rate, for the two methods to be equivalent?
You are thinking of building a new machine that will save you $1,000 in the first year. The machine will then begin to wear out so that the savings decline at a rate of 3% per year forever. What is the present value of the savings if the interest rate is 5% per year? The present value of the savings is $ (Round to the nearest dollar.)
Suppose you invest $3,000 today and receive $10,000 in 25 years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $3,000 upfront, but pays an equal amount at the end of each year for the next 25 years. If this investment has the same IRR as the first one, what is the amount you will receive each year? a. What is the internal rate of return (IRR) of this opportunity? The IRR of this opportunity is%. (Round to two decimal places.) b. Suppose another investment opportunity also requires $3,000 upfront, but pays an equal amount at the end of each year for the next 25 years. If this investment has the same IRR as the first one, what is the amount you will receive each year? The periodic payment that gives the same IRR is $ (Round to the nearest cent.)