You have entered into an agreement for the purchase of land. The agreement specifies that you will take ownership of the landimmediately. You have agreed to pay $50,000 today and another $50,000 in three years. Calculate the total cost of the land today,assuming a discount rate of (a) 5%, (b) 7 %, or (c) 9%.Note: Use tables, Excel, or a financial calculator. Round your answers to 2 decimal places. (FV of $1, PV of $1, FVA of $1, and PVA of$1)a.b.C.PaymentAmount$ 50,00050,00050,000InterestRate75%7%9%Answer is complete but not entirely correct.CompoundingAnnuallyAnnuallyAnnuallyPeriodDue3 years3 years3 years$Total Cost ofLand Today93,121.25 X90,816.30✔88,617.30

Present Value is the current price of future value which will be received in near future at some…

Answered: You have entered into an agreement for…

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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Billy Dan and Betty Lou were recently married and want to start saving for their dream home. They expect the house they want will cost approximately $255,000. They hope to be able to purchase the house for cash in 7 years. To determine the appropriate discount factor(s) using tables, click here to view Tables I. II. II. or IV in the appendix. Alternatively, if you calculate the discount factor(s) using a formula, round to six (6) decimal places before using the factor in the problem. Required a. How much will Billy Dan and Betty Lou have to invest each year to purchase their dream home at the end of 7 years? Assume an interest rate of 9 percent. b. Billy Dan's parents want to give the couple a substantial wedding gift for the purchase of their future home. How much must Billy Dan's parents give them now if they are to reach the desired amount of $255,000 in 9 years? Assume an interest rate of 9 percent. Complete this question by entering your answers in the tabs below. Required A…
Assume you paid cash for a beach house in Florida a while back and that you are now wanting to sell it. You have two offers for the house as follows: 1. $500,000 paid immediately (spot market sale) 2. $520,000 paid 1 year from now (Forward sale) Here is a list of the annual cost/income considerations: ● Property tax: $5,000 Insurance: $3,000 HOA dues: $4,000 Maintenance: $3,000 Rental Income: $35,000 What is the fair value forward price from your perspective? Opportunity cost of not receiving the 500K today is the money-market rate of 5% = $25,000 for 1 year ● $535,000 $540,000 $505,000 $495,000 $520,000
You have been offered a contract from Comp Co. You will receive $120,000 up front from Comp Co. In exchange, you will provide $50,000 in services each year for 3 years. Your cost of capital is 10%. Find the NPV and IRR of the deal. Should you accept the contract? Explain.
You want to investigate whether it will make financial sense for your business to purchase some real estate. Find a commercial property that is for sale in Charlotte, NC that your business could use (purchase price must be at least $20,000). Include the URL that will take the class to the webpage for the property. You will finance 80% of the purchase price; you will put 20% down on the purchase. Using 5% as the interest on your 30-year fixed rate mortgage, calculate the monthly payment. Next, calculate the payment using the same 5%, but for a 15-year mortgage. Show all steps in your calculations in your post. In a summary paragraph, discuss the results of your calculations and what you think is the best decision for your business to make regarding purchasing the property. Include these items in your post: URL link to property Calculation of 30-year monthly payment Calculation of 15-year monthly payment Steps in calculations (Excel is recommended) Summary
A young executive is going to purchase a vacation property for investment purposes. She needs to borrow $103,000.00 for 27 years at a 4.1% annual interest rate, with interest compounded monthly, and will make monthly payments of $526.17. (Round all answers to 2 decimal places.) Create an amortization table to answer the following: a) What is the unpaid balance after 11 months? $ 100410.01 b) Over the 11 months in part (a), how much total interest did she pay? S
Island News purchased a piece of property for $1.46 million. The firm paid a down payment of 20 percent in cash and financed the balance. The loan terms require monthly payments for 20 years at an APR of 4.33 percent, compounded monthly. What is the amount of each mortgage payment? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Note: You may use Excel or Google Sheets to solve this problem (highly recommended).
You have been asked to estimate the market value of an income-producing property. The table below provides 5 years of projected cash flows for the property. Use the discounted cash flow approach to income valuation to calculate the market value. Assume that you sell the property at the end of year 5 and that the net proceeds from the sale are $5 million. Also assume that the discount rate is 10%. PGI EGI NOI Year 1 $4.18 million $750,000 $780,000 $811,200 $637,500 $663,000 $689,520 $318,750 $331,500 $344,760 $6.11 million $4.12 million Year 2 $4.40 million Year 3 Year 4 $843,648 $717,101 $358,550 Year 5 $877,394 $745,785 $372,892
Use the TVM Solver to answer the following questions. Write each known variable's value as it appears in the calculator and use a question mark for the missing variable. Then, in the space provided write the missing variable's value, as it appears in the calculator. Finally, write your final answer in context, with units, as a complete sentence. Round to three decimals or by context. 1. Thomas plans to invest $3,400 into a money market account with a 6% annual interest rate compounded weekly. How much will be in the account after 9 years? Variable Value N = 1% = PV = PMT= FV = PY = CY = What is the Missing Variable Unit? Write a Context Sentence:
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