a. If the interest rate is 8%, what is the present value of the sales price? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) b. Is the property investment attractive to you? c-1. What is the present value of the future cash flows if you also could earn $200,000 per-year rent on the property? The rent is paid at the end of each year. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places. c-2. Is the property investment attractive to you now?

a. If the interest rate is 8%, what is the present value of the sales price? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) b. Is the property investment attractive to you? c-1. What is the present value of the future cash flows if you also could earn $200,000 per-year rent on the property? The rent is paid at the end of each year. Note: Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places. c-2. Is the property investment attractive to you now?

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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Problem 5-10 Calculating Perpetuity Values [LO 1] The Maybe Pay Life Insurance Company is trying to sell you an investment policy that will pay you and your heirs $29,000 per year forever. Assume the required return on this investment is 7.5 percent. How much will you pay for the policy? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Policy value today
Problem 5-22 Perpetuities (LO3) A local bank advertises the following deal: "Pay us $100 at the end of each year for 10 years and then we will pay you (or your beneficiaries) $100 at the end of each year forever." a. Calculate the present value of your payments to the bank if the interest rate is 8.25%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What is the present value of a $100 perpetuity deferred for 10 years if the interest rate is 8.25%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
f4. Subject :- Accounting What is the future value in 5 years of a $7,000 investment placed into a bank account today that will pay you 12% interest compounded quarterly? What is the present value of an investment that will pay you $1500/year forever? Use i=9% What is the present value of an investment that will pay you $2500/year forever? Use i=6%
Chapter 2 Question 5 Assume a 0.05 time value of money. We have a debt to pay and are given a choice of paying $1,000 now or some amount X five years from now. What is the maximum amount that X can be for us to be willing to defer payment for five years?
Q5. A systems engineer who invested wisely can retire now because she has $2,000,000 in her self-directed retirement account. Determine how many years she can withdraw (a) $100,000 per year, or (b) $150,000 per year (beginning 1 year from now) provided her account earns at a rate of 5% per year. (c) Explain why the increased annual withdrawal from $100,000 to $150,000 per year is important.
F1. True or False 1.Cap rate is defined as today's net operating income (NOI) divided by today's valuation of the property. 2. A property with a higher cap rate is always a better investment than a property with a lower cap rate. 3. Ann buys a small office building and pays for it cash with her own savings. Her return on equity (ROE) in the first year is equal to the building's cap rate at purchase. 4. Asset value = monthly debt payments + equity 5. Occupancy Rate = 100% - Vacancy Rate
OLA #10.3 Dylan purchased two trucks for his warehouse for a total of $54,000. This investment saved him $14,000 every year for 9 years. At the end of year 9, he sells both the trucks for a total of $8,500. A. What is the Net Present Value (NPV) of the investment if the required rate of return is 7%? B. Does the investment meet the required rate of return? Yes No Kindly use all the decimals DO NOT ROUND
Problem 5-34 Calculating Annuity Interest Rates [LO 4] An investor was afraid that he would become like King Lear in his retirement and beg hospitality from his children, so he purchased grain "tithes," or shares in farm output, for 540 pounds. The tithes paid him 65 pounds per year for 31 years. What interest rate did the he receive on this investment? What is the interest rate?
OLA #10.3 Dylan purchased two trucks for his warehouse for a total of $54,000. This investment saved him $14,000 every year for 9 years. At the end of year 9, he sells both the trucks for a total of $8,500. A. What is the Net Present Value (NPV) of the investment if the required rate of return is 7%? B. Does the investment meet the required rate of return? Yes No Please reply using algebra with details
(Related to Checkpoint 5.4) (Present value) Sarah Wiggum would like to make a single investment and have $2.0 million at the time of her retirement in 35 years. She has found a mutual fund that will earn 4 percent annually. How much will Sarah have to invest today? If Sarah earned an annual return of 14 percent, how soon could she then retire? a. If Sarah can earn 4 percent annually for the next 35 years, the amount of money she will have to invest today is $nothing. (Round to the nearest cent.)
QUESTION 5 Please use excel Robert has borrowed $339,000 to purchase a house in the current year at 5.5% interest rate, with a commitment to repay the loan (principal and interest) in equal annual instalments over the following 15 years. Calculate the: a) the yearly annuity payment is = $ b) the amount of the principal repayment in year 2 is = $ c) total amount of interest paid = $ d) if the interest rate decreases to 3% the total amount paid over the life of the loan would be = $ Provide your answers to 2 decimal places. Show all your working in your spreadsheet.
Problem 3: Dying Industry (2 points) You have a project which pays $1,000 in year 1 and cash flows decline 2% in each subsequent year. The annual interest rate is 5%. What is the net present value of the project now (year 0)?

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