Your company is considering purchasing an expensive piece of equipment. The manufacturer of the equipment offers a payment plan to pay $100,000 annually for 4 years. Assuming no other cash flow, the first payment is due at the end of the first year, and an interest rate of 6%, the minimum Present amount of money you will need is most nearly:

Your company is considering purchasing an expensive piece of equipment. The manufacturer of the equipment offers a payment plan to pay $100,000 annually for 4 years. Assuming no other cash flow, the first payment is due at the end of the first year, and an interest rate of 6%, the minimum Present amount of money you will need is most nearly:

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

See similar textbooks

Similar questions

You’re considering purchasing an apartment for $200,000. You believe that you can earn an initial rental income of $12,000 per year on it and that the rental income will grow at 3% per year. You also believe that you can sell the apartment for $225,000 after 5 years. The IRR calculation is shown below:
A small business has determined that the machinery they currently use will wear out in 17 years. To replace the new machine when it wears out, the company wants to establish a savings account today. If the interest rate on the account is 1.1 percent per quarter and the cost of the machinery will be $255,000, how much will the company have to deposit today?
You have decided to buy a car this year at a price of $18,000. You're planning to take out a loan for the full price of the vehicle at an interest rate of .5% per month. For the first two years (24 months), you decide to repay $600 per month. How much will you have to pay each month for the remainder of the three-year loan (12 months remain) to exactly pay off the car in full at the end of the three-year term? Hint: Consider the monthly interest rate, the number of periods in months, and the monthly cash flows. $433 $500 $443 $600 O $419
a. Renting a machine will need monthly payments of $6,000 for the next 5 years (i.e., at t = 1, 2, …, 60). However,if we choose to buy the machine today,which is (t = 0) will cost $320,000. Assume the machine's value is zero after 5 years. It is possible to borrow and lend at a semi-annually compounded interest rate of 6% (APR). Would it be better to buy or to lease? Explain. b.We are currently at year 0. It is worthy to note that there is a perpetuity that pays $250 at the end of each odd year and $150 at the end of each even year. The term structure is flat at 10% per year. Evaluate the present value of this perpetuity. c.Assume the CAPM is valid.The return on asset ABC is perfectly correlated with the return on market portfolio. Your friend makes the following statetment: a portfolio that had a dollar invested and at the same time,shorting one dollar of the market portfolio will have no systematic risk. Comment on this and whether it is feasible.
what would the formula be to solve for the table value? the table value is what i need to solve the problem
A real estate property is on the market. You have estimated it will give you net cash flows of $5136 per month. You hope to sell it in 9 years for $308182. Your required return is 9.46%, how much should you be willing to pay for the property today? Answer:
Quantitative Problem: You need $14,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 4 years, with the first payment to be made one year from today. He requires a 9% annual return. a. What will be your annual loan payments? Do not round intermediate calculations. Round your answer to the nearest cent. b. How much of your first payment will be applied to interest and to principal repayment? Do not round intermediate calculations. Round your answers to the nearest cent. Interest: $ Principal repayment: $
You are in the process of getting a new car but are not sure if you should buy or lease. The total cost of the car is $21,000, and you have a $275 monthly spend budget for payments. If you lease the car, the terms of the lease will be forty-eight months at an APR of 2.25%. The residual value of the car is $8,000. If you buy the car, a bank will offer an APR of 2.70% and seven years to repay the loan. You are not required to make a down payment with either the lease or loan options, and payments are made at the end of the month for both options. Should you lease or buy the car given your budget limit of $275 a month? Create a new workbook that shows the difference between leasing and buying the car in terms of monthly payments.
You want to buy a car, and the local bank will lend you $20,000. The loan will be fully amortized over 5 years (60 months) and the nominal interest rate will be 12%. The interest will be paid monthly. What will be the monthly loan payment? draw a time line and identify the known variables and unknown variables as if you were to input in EXCEL.

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS