Answer: Investment #2 is better by $7,855.88!, You have to choose between 2 investments. The first investment requires you to pay $1,989,453 three years from now, but it will earn you cash flow every year from the 2nd year to the 6th year; starting with $129,827 on the 2nd year; and this will grow 5% per year for 3 years; plus, you'll get back a lump sum of $1,639,837 on the 6th year. The second investment requires you to pay only $1,873,963 today, and then you'll earn $423,296 beginning 1 year from now and this will continue until the 5th year. Government bond rate stands at 2.3%. You can afford either investment, but can only choose one. With the NPV concept, which is a better investment for you, and by how much is it better? MORE VIDEOS 3:37 / 6:34 YouTube Share # JC

Answer: Investment #2 is better by $7,855.88!, You have to choose between 2 investments. The first investment requires you to pay $1,989,453 three years from now, but it will earn you cash flow every year from the 2nd year to the 6th year; starting with $129,827 on the 2nd year; and this will grow 5% per year for 3 years; plus, you'll get back a lump sum of $1,639,837 on the 6th year. The second investment requires you to pay only $1,873,963 today, and then you'll earn $423,296 beginning 1 year from now and this will continue until the 5th year. Government bond rate stands at 2.3%. You can afford either investment, but can only choose one. With the NPV concept, which is a better investment for you, and by how much is it better? MORE VIDEOS 3:37 / 6:34 YouTube Share # JC

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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show your solution As an engineer, you plan to put aside 20% of your yearly income. You expect to make Php1 million in the first year, and then you expect your income to increase by 10,000 each year for the next 6 years. At the interest rate 10% per year, what is the accumulated amount after 6 years? a.Php 524,456 b.Php 807,723 c.Php 967,893 d.Php 1,714,683
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%?
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)
A person buys a piece of lot for Php 104239 down payment and 10 deferred semi-annual payments of P 5,000 each, starting 6 years from now. What is the present value of the investment if the rate of interest is 13% per year compounded quarterly? Round off the interest rate to five decimal places. Round your answer to 2 decimal places.
Assume that your father is now 50 years old and plans to retire after 10 years from now. He is expected to live for another 25 years after retirement. He wants a fixed retirement income of Rs. 5,00,000 per annum. His retirement income will begin the day he retires, 10 years from today, and then he will get 24 additional payments annually. Your father has current savings of Rs. 10,00,000 and he expects to earn a return on his savings @ 10% p.a., annually compounding. How much (to the nearest of rupee) must your father save during each of next 10 years to meet his retirement goal?
Alex buys a bond with a face value of $12,000 with three years remaining to maturity, and an annual coupon payment of 14%. Suppose the market interest rate is 12% one year from now. (a.) At what price would Mr. Alex sell his bond one year from now? (b.) What is the total rate of return assuming Alex sells his bond one year?
Suppose that annual income from a rental property is expected to start at$1,100 per year and decrease at a uniform amount of $50 each year after the first year for the 14-year expected life of the property. The investment cost is$8,600,and i is 7% per year. Is this a good investment? Assume that the investment occurs at time zero (now) and that the annual income is first received at EOY one. The present equivalent of the rental income equals $ . (Round to the nearest dollar
HOW MUCH MONEY MUST YOU INVEST TODAY IN ORDER TO WITHDRAW P2,000.00 ANNUALLY FOR 10 YEARS IF THE INTEREST RATE IS 9%? a.P12,385.32 b.P12,835.32 c.P12,881.37 d.P12,853.32
Compute how much a business is worth if it is expected to generate cash flows to its owners of $0 for the next three years, $42,800 in three years, $60,000 in four years, then $85,000 per year for the subsequent U years (i.e., $85,000 per year after four years in the future and then continuing for the next U years until 4+U years into the future), and finally generates cash inflows to its owners of $100,000 per year thereafter forever (i.e., $100,000 forever after 4+U years), assuming that businesses with similar relevant risk have expected returns of 15%. U=44
Eleanor makes a year-end deposits of Php. 500 the first year, Php. 550 the second year, Php. 605 the third year, and so on, increasing the next year’s deposit by 10% of the deposit in the preceding year until the end of the tenth year. Ronald makes equal year-end deposits of Php. 700 each year for 10 years. If interest on both funds is 12% compounded annually, who will be able to save more at the end of the 10 years?
1. What is the annual rate of interest if P300 is earned in four months in an investment of P15350?
A person buys a piece of lot for Php 107203 down payment and 10 deferred semi-annual payments of P 5,000 each, starting 4 years from now. What is the present value of the investment if the rate of interest is 13% per year compounded quarterly? Note: Round off your interest rate to five decimal places. Round your answer to 2 decimal places.Create also a cashflow diagram