Assume the total cost of a college education will be $336,000 when your child enters college in 18 years. You presently have $71,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college education? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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In economics the concept of the time value of money (TVM) states that sum of money is worth presently compared to the same amount at a future date
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- A study by the New York Federal Reserve Bank concludes that an engineering bachelor’s degree generates approximately a 15% return on investment over the course of a decade. Suppose the typical engineering student spends $15,000 per year for four years on his/her education. What extra annual return (in dollars) does the typical student realize during the 10 years following graduation? State your assumptions.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 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
- Suppose that Anna's college education would cost around $500,000 when they enter college in 15 years. At present, She have $100,000 to invest.What annual interest must she earn on her investment to cover the costQs 15: Which one of the following statement regarding Factor of Production is correct? (a) It is the input that a firm uses in the production process. (b) It is the output which is produced in the production process. (c) It is the additional input that is required to achieve the maximum output. (d) It is the ratio of the output to that of the input of the production process.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%?
- 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=44A 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 the maintenance for a piece of equipment costs P2,669 on year 1 and increases by 5.69% every year for 20 years. The value of money is 9.12%. What is the equivalent present cost over the time horizon? Write your final answer in two 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?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.Suppose an individual places his money in a bank for a year then invests in apples for a year. Suppose the bank has an annual rate of 5%, compounded continuously. During the year in which the individual's money is in the bank, the apple grows in price from $1 to $1.25. Suppose its return doubles in the second year, when the individual's money is invested in the apples. He starts the first investment period with $100. How much money does he have after two years following the investment plan given above? Group of answer choices $105.1 $124.7 $154.4 $157.7