An owner can lease her building for $140,000 per year for three years. The explicit cost of maintaining the building is $45,000, and the implicit cost is $60,000. All revenues are received, and costs borne, at the end of each year. If the interest rate is 5 percent, determine the present value of the stream of: Instructions: Do not round intermediate calculations. Round your final calculation to two decimal places. a. Accounting profits. $ b. Economic profits. $

An owner can lease her building for $140,000 per year for three years. The explicit cost of maintaining the building is $45,000, and the implicit cost is $60,000. All revenues are received, and costs borne, at the end of each year. If the interest rate is 5 percent, determine the present value of the stream of: Instructions: Do not round intermediate calculations. Round your final calculation to two decimal places. a. Accounting profits. $ b. Economic profits. $

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 14E

See similar textbooks

Similar questions

You are the manager of the Mighty Fine mutual fund. The following table reflects the activity of the fund during the last quarter. The fund started the quarter on January 1 with a balance of $100 million. Mighty Fine Mutual Pund Monthly Data (measured at end of month) February -4.3 6.20 March January 5.5 Net inflows ($ million) HPR () -4.30 1.80 Required: a. Calculate the quarterly arithmetic average return on the fund. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Arithmetic average 1.23 % b. Calculate the quarterly geometric (time-weighted) average return on the fund. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Geometric average 1.14 % c. Calculate the quarterly dollar-weighted average return on the fund. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Dollar-weighted average return
Economics In 54 months time you expect a cash flow of $3 million. Calculate it’s present value (PV) given the 54-month interest rate is currently 4%, with a volatility of 120 basis points (bps). Explain, using equations with properly-defined mathematical notation, how to map this cash flow to vertices at 4 years and 5 years, in such a way that the volatility of the present value of the mapped cash flow remains at 120 bps. Suppose the 4-year rate has a volatility of 110 bps and the 5-year rate has a volatility of 150 bps, and their correlation is 0.9. How much should be mapped to each vertex. Give your answer in PV terms and round your answers to whole $ values.
An owner can lease her building for $100,000 per year for three years. The explicit cost of maintaining the building is $35,000, and the implicit cost is $50,000. All revenues are received, and costs borne, at the end of each year. If the interest rate is 4 percent, determine the present value of the stream of: Instructions: Do not round intermediate calculations. Round your final calculation to two decimal places. a. Accounting profits. $104000 X b. Economic profits. $19000 x
▼ Cash Flow Present Discounted Value Interest Rate is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. Part 2 The present value of a loan in which $3000 is to be paid out a year from today with the interest rate equal to 3% is $enter your response here. (Round your response to the neareast two decimal place) Part 3 If a loan is paid after two years, and the amount $3000 is to be paid then with a corresponding 1% interest rate, the present value of the loan is $enter your response here. (Round your response to the neareast two decimal place)
▼ Cash Flow Present Discounted Value Interest Rate is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. Part 2 The present value of a loan in which $3000 is to be paid out a year from today with the interest rate equal to 3% is $.(Round your response to the neareast two decimal place) Part 3 If a loan is paid after two years, and the amount $3000 is to be paid then with a corresponding 1% interest rate, the present value of the loan is $.(Round your response to the neareast two decimal place)
▼ Cash Flow Present Discounted Value Interest Rate is based on the notion that a dollar paid in the future is less valuable than a dollar paid today. Part 2 The present value of a loan in which $3000 is to be paid out a year from today with the interest rate equal to 3% is $.(Round your response to the neareast two decimal place) Part 3 If a loan is paid after two years, and the amount $3000 is to be paid then with a corresponding 1% interest rate, the present value of the loan is $.(Round your response to the neareast two decimal place)
What impact does the market for intangible property such as stocks and bonds have on the market for real estate? Why would a real estate investor pay attention to what is happening in these markets? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
2. A present obligation of $20,000 is to be repaid in equal uniform annual amounts, each of which includes repayment of the debt principal and interest on the debt, over a period of five years. If the interest rate is 10% per year, what is the amount of the annual repayment? 3. You have an investment opportunity that costs $35,000 and eight years later pays a lump-sum amount of $100,000. What interest rate per year would be earned on this investment?
Lewis’s management has been considering movingto a new downtown location, and they are concerned that these plans may come to fruition priorto the equipment lease’s expiration. If the moveoccurs then Lewis would buy or lease an entirelynew set of equipment, so management wouldlike to include a cancellation clause in the leasecontract. What effect would such a clause haveon the riskiness of the lease from Lewis’s standpoint? From the lessor’s standpoint? If you werethe lessor, would you insist on changing any ofthe other lease terms if a cancellation clause wereadded? Should the cancellation clause containprovisions similar to call premiums or any restrictive covenants and/or penalties of the type contained in bond indentures? Explain your answer.
1- In year 12 Adam earns $1450 and saves $550. In year 21 Adam gets a $4550 raise so that he earns a total of $6000. Out of that $6000, he saves $650. What is Adam's MPC out of his $4550 raise?
Give typing answer with explanation and conclusion Gustav Co. is planning to issue new 30-year bonds. The current plan is to make the bonds non-callable, but this may be changed. If the bonds are made callable after 5 years at a 5% call premium, how would this affect their required rate of return? Question 6 options: There is no reason to expect a change in the required rate of return. The required rate of return would increase because the bond would then be?
Suppose that you are considering an investment, which would require you to pay $1,000 up front (today), and you would receive a payment of $100 per year, for 5 years, beginning one year from now. One year after your fifth payment, you would then have $800 paid to you as a final payment. Assume that the interest rate is equal to 5%. Round all answers to two decimal places. 5. Calculate the Present Value (PV) of the cost and each of the payments for the investment. Does this investment have a positive or negative present value? Should you make this investment? 6. How much would the initial cost ($1,000) need to change for you to be exactly indifferent about this investment? (i.e. you receive the same return for making this investment as you do for not making this investment?)