A young man has decided to go into the business at the age of 25, he deposits a certain amount and will increase the deposit by 50,000 each year until the age of 35 to reach 30M on that age. If the fund can be invested at 15% compounded annually, how much should his initial investment be? DRAW THE CASH FLOW DIAGRAM.
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- Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a net cash inflow one year from now of 810,000. Assume the cost of capital is 10 percent. Required: 1. Break the 810,000 future cash inflow into three components: a. The return of the original investment b. The cost of capital c. The profit earned on the investment 2. Now, compute the present value of the profit earned on the investment. 3. Compute the NPV of the investment. Compare this with the present value of the profit computed in Requirement 2. What does this tell you about the meaning of NPV?4. A young man has decided to go into the business at the age of 25, he deposits a certain amount and will increase the deposit by 50,000 each year until the age of 35 to reach 30M on that age. If the fund can be invested at 15% compounded annually, how much should his initial investment be? DRAW THE CASH FLOW DIAGRAMMetaz is planning to invest OMR 3500 every year for the next six years in an investment paying 12 percent annually. What will be the amount he will have at the end of the six years Select one: a. 28403.16 OMR b. 24680.54 OMR c. 25107.50 OMR d. None e. 24680.54 OMR Find the profitability index for Shanfari Company if the initial investment is 7900 OMR and the cash Inflows are as follows: Year 1 =1350 OMR; Year 2 =2400 OMR; Year 3=2450 OMR and Year 4=2500 OMR. Use discount rate as 5.05%. Select one: a. 1.15 Accept b. 1.15 Reject c. None of the options d. 0.96 Reject e. 0.96 Accept
- Today, you invest P100,000 into a fund that pays 25% interest compounded annually. Three years later, you borrow P50,000 from a bank at 20% annual interest and invest in the fund. Two years later, you withdraw enough money from the fund to repay the bank loan and all interest due on it. Three years from this withdrawal you start taking P20,000 per year out of the fund. How much was withdrawn?Mr.Andi is a manager at an automation company. As part of his future planning, Mr.Andi plan to manage an investment IDR 100 thousand in the first year and increase this amount is 10% annually. To solve this problem, you have to create a spreadsheet from the data provided to complete your calculations along with the cash flow. Based on the data given: (a) How long will Mr.Andi's account have value in the future of IDR 3,000,000 at a rate of return of 6% per annum? (b) If Mr.Andi counts up to the next 30 years, find the nominal amount in the next 10, 20, and 30 years that Mr. Andi will achieve. The calculation spreadsheet can describe the amount deposited annually.How much more or less money would you have to invest today to have $6,500 in 4 years at 5.30% compounded monthly instead of 5.46% compounded annually? Green Inc. invested $20,000.00 in a fund at an interest rate of 4.00% compounded annually. At the end of 22 months their investment advisor transferred these funds to another investment that was yielding 14.50% compounding monthly for the next year. By how much did the fund grow?
- Walt is evaluating an investment that will provide the following cash flows at the end of each of the following years: year 1, $12,500; year 2, $10,000; year 3, $7,500; year 4, $5,000; year 5, $2,500; year 6, $0; and year 7, $12,500. Walt believes that he should earn an annual rate of 9% on this investment. How much should he pay today for the investment?Mr. Jones is planning a 20-year retirement; he wants to withdraw 300,000 at the end of the first year, and then to increase the withdrawals by 40,000 each year to offset inflation. How much money should he have in his savings account at the start of his retirement, if the bank pays 9% per year, compounded annually, on his savings? Draw cash flow diagram.Suppose you have an opportunity to invest in a fund that pays 12% interest compounded annually. Today, you invest $10,000 into this fund. Three years later(EOY 3), you borrow $5,000 from a local bank at 10% annualinterest and invest it in the fund. Two years later (EOY 5), you withdraw enough money from the fund to repay the bank loan and all interest due on it. Three years from this withdrawal (EOY 8) you start taking $2,000 per year out of the fund. After five withdrawals of $2,000, you have withdrawn your original $10,000. The amount remaining in the fund is earned interest. How much remains?
- You now have $10,000, and the following investmentplans are available to you during the next three years:■ Investment A: Every dollar invested now yields$0.10 a year from now and $1.30 three years fromnow.■ Investment B: Every dollar invested now yields $0.20 ayear from now and $1.10 two years from now.■ Investment C: Every dollar invested a year fromnow yields $1.50 three years from now.During each year, you can place uninvested cash inmoney market funds that yield 3% interest per year.However, you can invest at most $5000 in any one ofplans A, B, or C. Determine how to maximize yourcash on hand three years from now.If P20,000 is invested in a fund that pays 10% compounded annually, how much money will be in the fund after 3 years? Accumulate P30,000 for 3 years and 6 months at 16% compounded semiannually. What is the compound amount after you invest P22,350 for 5 years and 6 months at 5% compounded semiannually? What is the (a) present value and (b) compound interest earned for 3 years and 9 months of P84,500 that is compounded quarterly at 20% interest? Find the nominal rate which when compounded semiannually and applied to a P50,000 principal will earn an interest of P5,000 after 60 months. In how many months will P10,000 earn a compound interest of P2,000 if money is worth 12% compounded monthly? What effective rate is the equivalent to 15% compounded annually?Fred is considering an investment that will cost him $1000 today and will pay $200 at the end of each month for twelve months with a final cost at the end of the twelve month period of $400. Draw two cash flow diagrams, one showing the cash flows separately and the other showing the net cash flows.
