You decide to invest money for buying a house. You initially invest $50,000 and plan on making annual payments of $3,000 for 15 years. You want to rent the house for $2.000 starting on year for 8 years. You estimate that you will spend $1.500 for repairs at year 6 and $2,000 a year 12. Draw the cash flow diagram

You decide to invest money for buying a house. You initially invest $50,000 and plan on making annual payments of $3,000 for 15 years. You want to rent the house for $2.000 starting on year for 8 years. You estimate that you will spend $1.500 for repairs at year 6 and $2,000 a year 12. Draw the cash flow diagram

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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Question

You decide to invest money for buying a house. You initially invest $30,000
and plan on making annual payments of $3,000 for 15 years. You want to rent the house
for $2,000 starting on year 4 for 8 years. You estimate that you will spend $1,500 for
repairs at year 6 and $2,000 at year 12. Draw the cash flow diagram

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Margaret has an investment opportunity where she can receive cashflows as follows 1. $1,000 end of years 1 & 2 2. $1,100 end of years 3 & 4 3. $1,200 end of years 5 to perpetuity 4. $1,400 end of years 8 to perpetuity If you require a return of 8%, how much should you be willing to pay for this investment today? A. $36, 700 B. $59, 750 C. $24, 702 D. $25, 584 E. $27, 353 F. $58, 750
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What is the present value of a savings account that is expected to pay $1,250 of cash inflow at the end of year 1, $0 cash inflow at the end of year 2 and $1,050 cash inflow at the end of 3rd year given the rate of return 10% in the first and second year and 12% in the third year? Please Show the work

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