You are considering in investing one of the two options: Investment A requires a $175,000 upfront payment and generates $12,000 annually, Investment B requires a $250,000 upfront payment. How much should Investment B generate annually so that the total returns from Investment A and B become equal after 25 years? O None of the others O $15,000 O $9,000 O $75,000 O $3,000
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- How much would you invest today in order to receive $30,000 in each of the following (for further Instructions on present value In Excel, see Appendix C): A. 10 years at 9% B. 8 years at 12% C. 14 years at 15% D. 19 years at 18%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-YesNoAn 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
- You will deposit $30,000 per year into an account beginning today that pays 13 percent per year. How long (in years) would it take for you want have a total of $1,000,000 at retirement? m Nper (or N) =n*m Rate (or I/Y)=i/m PV PMT FV Must identify variables and use excelSuppose 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?Jim Nance has been offered an investment that will pay him $860 three years from today. a. If his opportunity cost is 9% compounded annually, what value should he place on this opportunity today? b. What is the most he should pay to purchase this payment today? c. If Jim can purchase this investment for less than the amount calculated in part (a), what does that imply about the rate of return that he will earn on the investment?
- The Maybe Pay Life Insurance Company is trying to sell you an investment policy that will pay you and your heirs $40,000 per year forever. If the required return on this investment is 6.3 percent, how much will you pay for the policy? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Present valueAn 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?How much will you pay for an investment if you expect to receive $3,500 end of each year in perpetuity and if the appropriate interest rate is 5%? $50.000.00 $60,000.00 $300,000.00 O $150,000.00 $70,000.00 O $350,000.00 O $200,000.00 Cannot compute. Not enough information
- 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.)You have a chance to buy an annuity that pays $25,000 at the beginning of each year for 10 years. You could earn 8.5% on your money in other investments with equal risk. What is the most you should pay for the annuity? You are not required to show calculations but you must list the inputs used such as N, PV, FV, etc. O $346,484.41 O $177,976.57 O $164,033.70An 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