Journal Can I Afford That

A large electronic retailer is considering the purchase of software that will minimize shipping expenses in its supply chain network. This software, including installation and training, would be a $10-million investment for the retailer. If the firm’s effective interest rate is 15% per year and the life of the software is four years, what annual savings in shipping expenses must there be to justify the purchase of the software?  

Suppose that you purchase a tractor for $170,000 and sell it in 10 years for $50,000. What is the annualized cost (capital recovery) if your required return on capital is 12%?

During a recession, the price of goods and services goes down because of low demand. A company that makes Ethernet adapters is planning to expand its production facility at a cost of $1,000,000 one year from now. However, a contractor who needs work has offered to do the job for $790,000 if the company will do the expansion now instead of 1 year from now. If the interest rate is 15% per year, how much of a discount is the company getting? The answer is $79,565. ALL I NEED IS A SOLUTION TO THE PROBLEM. THANK YOU

Suppose a friend of yours invests $100 each month in an individual retirement account (IRA) for a decade and earns an unbelievable APR of 12% a year (1% per month) on her investment. She will end up with $100 (F/A, 1%, 120) = $100 (230.0387) = $23,003.87 after 10 years. If you decide to invest $200 each month over 10 years, but can earn only a meager APR of 3% per year on it, roughly how much will you have accumulated after 10 years?Choose the closest answer. (a) $19,000 (b) $24,000 (c) $28,000 (d) $46,000.

A Flexible Savings Account (FSA) plan allows you to put money into an account at the beginning of the calendar year that can be used for medical expenses. This amount is not subject to federal tax. As you pay medical expenses during the year, you are reimbursed by the administrator of the FSA until the money is exhausted. From that point on, you must pay your medical expenses out of your own pocket. On the other hand, if you put more money into your FSA than the medical expenses you incur, this extra money is lost to you. Your annual salary is $80,000 and your federal income tax rate is 30%. [1] Assume that your medical expenses in a year are normally distributed with mean $2000 and standard deviation $500. Build an @RISK model in which the output is the amount of money left to you after paying taxes, putting money in an FSA, and paying any extra medical expenses. Experiment with the amount of money put in the FSA, using a RISKSIMTABLE function. [2] Rework part a, but this time assume…

Find the present value of a loan on December 4, 2010 if the maturity value on October 4, 2011 is PHP 420,000. The applicable rate is 9% discount interest.

For items 21-30, when asked about an amount of money (interest, discount, present value, future value, annuity, regular payment) round off your final answers to two decimal place values. When asked about rate of interest, express your final answer as percent rounded off to two decimal place values. When asked about time, round off answers to the nearest year., except when asked for the number of days. 21. Rica obtained a 3-year ₱40 000 discounted loan at 2% simple interest for her online business. Find the discount.22. Rica obtained a 3-year ₱40 000 discounted loan at 2% simple interest for her online business. Find the amount of money Rica received.23. Rica obtained a 3-year ₱40,000 discounted loan at 2% simple interest for her online business. Find the true interest rate.24. Find the future value of a ₱120,000-investment compounded semi-annually at 1.5% for 5 years.25. Find the interest on a ₱120,000-investment compounded semi-annually at 1.5% for 5 years.26. Suppose that you want to…

State University tuition and fees can be paid using one of two plans. Early-bird: Pay total amount due one year in advance and get a 10% discount. On-time: Pay total amount due when classes start. If the cost of tuition and fees is $20,000 per year, (a) how much is paid in the early-bird plan, and (b) at an interest rate of 6% per year, what is the equivalent amount of the savings compared to paying when classes start, that is, 1 year later than the early-bird plan?

John invests 10000 of his savings into opening up a new coffee roasting company over the course of a year the new coffee roasting company earns him a 6% return on his investment if John had not invested his money in the coffee roasting company he could have earned a 5% return by investing the 10000 in the stock market instead thus he did 1% better in the coffee roasting company than he could have done on his alternative investment which kind of cost does this alternative investment represent opportunity cost  average total cost  fixed cost  variable cost

An environmentally friendly green home (99% air tight) costs about 8% more to construct than a conventional home. Most green homes can save 15% per year on energy expenses to heat and cool the dwelling. For a $250,000 conventional home, how much would have to be saved in energy expenses per year when the life of the home is 30 years and the interest rate is 10% per year? Assume the additional cost of a green home has no value at the end of 30 years.

What is the definition of internal rate of return (IRR)? If you expect the annual interest rates are much different in the next 10 years, would the IRR be the ideal measure? Why or why not?

Suppose I have computed the cost of carbon per mile for my car at 0.011 per mile. Assume that the interest rate is 5% and that I drive the car 30,000 miles per year. What is present value of the carbon expense for five years? You will need to use the PV function in Excel or a financial calculator. In Excel the present value of a stream of monetary cash flows is given by -PV(rate, number of payments, payment amount) where rate is the interest rate. We enter the payment in Excel as a positive number. You can also compute the carbon cost per year and then discount those five values back to the present.

An investor invests the following amounts of money in a bank account: R18,850 on 1 September 2019 , R15,575 on 31 May 2021 and R19,465 on 1 February 2023. From 1 October 2021 up to 30 April 2023 an amount of R980 is invested at the start of every month. From 1 July 2020 up to 31 March 2022 an amount of RX is invested at the end of each quarter. On 1 January 2019 the total present value of all the investments is R75,998.34. If the interest rate is 8.75% per year, calculate the value of X (annuity invested every quarter)

T and X entered into a contract of sale of a piece of land. T agreed that on the 5th day of July 2022, he will deliver the property’s title and help X identify the lot. The day came and T was able to accomplish all his duties. What kind of sale was made? A. Absolute sale B. Conditional sale C. Absolute and conditional sale D. None of the above

A pharmaceutical company has spent $500 million to date working on a blood pressure treatment. It has to decide whether to spend another $500 million today to get final approval from the FDA in two years. Once approved, expected profits will be $50 million per year for the foreseeable future. The firm’s cost of capital is 5%. -Should the firm proceed? (Hint: use the perpetuity formula used to value projects found in the readings to find the value of the profit stream that starts in two years, and then discount that.)

Use economic equivalence to determine the amount of money or value of i that makes the following statements correct. (a) $5000 today is equivalent to $4275 exactly 1 year ago at i = ___% per year. (b) A car that costs $28,000 today will cost $____ a year from now at i = 4% per year. (c) At i = 4% per year, a car that costs $28,000 now, would have cost $____ one year ago. (d) Last year, Jackson borrowed $20,000 to buy a preowned boat. He repaid the principal of the loan plus $2750 interest after only 1 year. This year, his brother Henri borrowed $15,000 to buy a car and expects to pay it off in only 1 year plus interest of $2295. The rate that each brother paid for his loan is ___ % for Jackson and ___ % per year for Henri. (e) Last year, Sheila turned down a job that paid $75,000 per year. This year, she accepted one that pays $81,000 per year. The salaries are equivalent at i = ____% per year.

A large automobile manufacturer has developed a continuous variable transmission (CVT) that provides smooth shifting and enhances fuel efficiency by 2 mpg of gasoline. The extra cost of a CVT is $800 on the sticker price of a new car. For a particular model averaging 28 miles per gallon with the CVT, what is the cost of gasoline (dollars per gallon) that makes this option affordable when the buyer’s interest rate is 10% per year? The car will be driven 100,000 miles uniformly over an eight-year period.

A manufacturer invests $50,000 in a new production line that is expected to generate $70,000 in revenue over its useful life. If the effective interest rate on the investment is 12% per year, what is the net present value of the project?

A certain investment opportunity available to you will double your money in the next six years. You have $2,000.00 to invest, how much will you have in 12 years-assuming the interest rate is guaranteed for the time period?

Betty will need $12,000 in five years to pay for a major overhaul on her tractor engine.  She has found an investment that will provide a 10% return on her invested funds.  How much does Betty need to invest today so she will have her overhaul funds in five years? （10.0分）

Suppose that you plan to retire at 65. You invest $8,000 per year on your birthday for 10 years starting on your 25th and ending on your 34th birthday. Since you are young, you take more risks with your investments, and earn a rate of return of 12%. Then, you have children and decide to put all your retirement savings into investing in a college fund for them. You leave all accumulated funds in the retirement account, and it earns 6% per year, reflecting an (unwise) rise in caution during middle age. How much money will you have to retire on at 65 (31 years after you stop contributing)

Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smart phones.  Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit.  With annual overhead costs and operating expenses amounting to $145,000, Jamie expects a profit margin of 20 percent.  During the first year, Jamie is using her savings to cover total costs. Current annual rate of return on saving is 2.1%. This margin is 5 percent larger than that of her largest competitor, Apps, Inc.  If Jamie decides to embark on her new venture, Accounting costs:  Economic costs:   Opportunity costs:

Jamie is considering leaving her current job, which pays $75,000 per year, to start a new company that develops applications for smart phones.  Based on market research, she can sell about 50,000 units during the first year at a price of $4 per unit.  With annual overhead costs and operating expenses amounting to $145,000, Jamie expects a profit margin of 20 percent.  During the first year, Jamie is using her savings to cover total costs. Current annual rate of return on saving is 2.1%. This margin is 5 percent larger than that of her largest competitor, Apps, Inc.  Accounting costs?  Economic costs?  Opportunity costs? Suppose that Jamie’s estimated selling price is lower than originally projected during the first year. How much revenue would she need in order to earn positive accounting profits?  Positive economic profits?

Damon buys a television set from an appliance store who asks for P1,250 if paid at the end of 60 days. However, he wishes to pay immediately and the store offers to compute the cash price now. What is the cash price today if money is worth 8% simple interest? Draw the cash flow of the given problem.