Contemporary Engineering Economics (6th Edition)
6th Edition
ISBN: 9780134105598
Author: Chan S. Park
Publisher: PEARSON
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Chapter 10, Problem 3P
To determine
Calculate the net cash flow.
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Yogajothi is thinking of investing in a rental house. The total cost to purchase the house, including legal fees and taxes, is $240,000. All but $30,000 of this amount will be mortgaged. He will pay $1700 per month in mortgage payments. At the end of two years, he will sell the
house and at that time expects to clear $50,000 after paying off the remaining mortgage principal (in other words, he will pay off all his debts for the house and still have $50,000 left). Rents will earn him $2500 per month for the first year and $2900 per month for the second year.
The house is in fairly good condition now, so he doesn't expect to have any maintenance costs for the first six months. For the seventh month, Yogajothi has budgeted $500. This figure will be increased by $50 per month thereafter (e.g., the expected month 7 expense will be
$500, month 8, $550, month 9, $600, etc.). If interest is 6 percent compounded monthly, what is the present worth of this investment? Given that Yogajothi's…
Yogajothi is thinking of investing in a rental house. The total cost to purchase the house, including legal fees and taxes, is $230,000. All but $20,000 of
this amount will be mortgaged. He will pay $1500 per month in mortgage payments. At the end of two years, he will sell the house and at that time
expects to clear $40,000 after paying off the remaining mortgage principal (in other words, he will pay off all his debts for the house and still have
$40,000 left). Rents will eam him $2500 per month for the first year and $2800 per month for the second year. The house is in fairly good condition now,
so he doesn't expect to have any maintenance costs for the first six months. For the seventh month, Yogajothi has budgeted $300. This figure will be
increased by $30 per month thereafter (e.g., the expected month 7 expense will be $300, month 8, $330, month 9, $360, etc.). If interest is 6 percent
compounded monthly, what is the present worth of this investment? Given that Yogajothi's…
Question attached
In early 2008, you purchased and remodeled a 120-room hotel to handle the increased number of conventions coming to town. By mid-2008, it became apparent that the recession would kill the demand for conventions. Now, you forecast that you will be able to sell only 10,000 room-nights, which cost $70 per room per night to service. You spent $25.00 million on the hotel in 2008, and your cost of capital is 10%. The current going price to sell the hotel is $20 million.If the estimated demand is 10,000 room-nights, the break-even price is $per room, per night. (Hint: Remember that the cost of capital is the opportunity cost, or true cost, of making an investment.)
Chapter 10 Solutions
Contemporary Engineering Economics (6th Edition)
Ch. 10 - Prob. 1PCh. 10 - Prob. 2PCh. 10 - Prob. 3PCh. 10 - Prob. 4PCh. 10 - Prob. 5PCh. 10 - Prob. 6PCh. 10 - Prob. 7PCh. 10 - Prob. 8PCh. 10 - Prob. 9PCh. 10 - Prob. 10P
Ch. 10 - Prob. 11PCh. 10 - Prob. 12PCh. 10 - Prob. 13PCh. 10 - Prob. 14PCh. 10 - Prob. 15PCh. 10 - Prob. 16PCh. 10 - Prob. 17PCh. 10 - Prob. 18PCh. 10 - Prob. 19PCh. 10 - Prob. 20PCh. 10 - Prob. 21PCh. 10 - Prob. 22PCh. 10 - Prob. 23PCh. 10 - Prob. 24PCh. 10 - Prob. 25PCh. 10 - Prob. 26PCh. 10 - Prob. 27PCh. 10 - Prob. 28PCh. 10 - Prob. 29PCh. 10 - Prob. 30PCh. 10 - Prob. 31PCh. 10 - Prob. 32PCh. 10 - Prob. 33PCh. 10 - Prob. 34PCh. 10 - Prob. 35PCh. 10 - Prob. 36PCh. 10 - Prob. 37PCh. 10 - Prob. 1STCh. 10 - Prob. 2STCh. 10 - Prob. 3STCh. 10 - Prob. 4STCh. 10 - Prob. 5ST
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