Topic: MultiplierMACRO 1. Investment ProblemCost of bldg.. =5MGross Revenue = 9.5 M%3DOperating expense = 4MNominal interest rate = 12%%3DÔngoing inflation rate = 8%%3Da.) How much is the total profit?b.) Determine the expected rate of return (r)c.) Determine the real interest rated.) Determine the interest coste.) How much will be added to the firm's profit?

Investment Problem Cost of bldg.. =5M Gross Revenue = 9.5 M Operating expense = 4M Nominal interest rate = 12% Ongoing inflation rate = 8% a.) How much is the total profit? b.) Determine the expected rate of return (r) c.) Determine the real interest rate d.) Determine the interest cost e.) How much will be added to the firm's profit?

Investment Problem Cost of bldg.. =5M Gross Revenue = 9.5 M Operating expense = 4M Nominal interest rate = 12% Ongoing inflation rate = 8% a.) How much is the total profit? b.) Determine the expected rate of return (r) c.) Determine the real interest rate d.) Determine the interest cost e.) How much will be added to the firm's profit?

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

Problem 12EP

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