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- You can buy a property today for $3 million and sell it in 5 years for $4 million. (You earn no rental income on the property.) 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?Mr. Rahim is planning to pursue MBA studies. Initial inquiry shows that he will have to pay RM 20,000 as tuition fee, buy books for RM 2,000, and pay for transport RM 500. The MBA study programme will extend over 18 months. Mr Rahim is working now with a salary of RM 2,500 per month. Being a full time student, he will have to forego the income from his present job for the period of study. Work out the (a) Financial cost, and (b) the Economic Cost of doing MBA (Hint: Identify implicit costs and explicit costs Solve economic questionThe stock market has an average annual return of 10% per year. We will consider the annual return to be an annual interest rate Now suppose the stock market for the next 10 years has a strong growth rate. If you invested your $1400 stimulus check in the stock market with 16% annual interest, compounded annually, how much money would you have after 10 years?
- 6. A bank charges an interest rate of 7%. An engineer wants to loan an amount ofFhp 1,000,000 to start his construction business from January 06, 2022 to December 30,2022. Determine the difference of future worth of ordinary simple interest and exact simpleinterest.A young engineer borrowed $12,000 at 10% interest and paid $3,000 per annumfor the last 4 years. What does he have to pay at the end of the fifth year in order to payoff his loan? $3.689$3,758$3,982$4.001$4.0112. Marion would like to purchase a used car, which requires a down payment of 80,000.00 pesos. He is willing to pay a monthly amortization equal to 25% of his monthly salary. if the seller will agree to a down payment and the balance payable in 3 years at 16% per year payable in monthly basis, how much is the cash value of the car if the first payment will be due at the end of the first month? Mario is receiving a monthly salary of 16,000.00 pesos a month. Show the cashflow diagram.
- 1. Deferred Annuity/ Shifted Series A contractor bought a concrete mixer at 120,000.00 if paid in cash. The mixer may also be purchased by installment to be paid within 5 years. If the interest rate is 8%, what is the amount of each annual payment if all payments are made at the beginning of each year?A man is buying a new eco-friendly electric riding mower. There will be no maintenance cost during the first 2 years because the mower is sold with 2 years free maintenance. For the third year, the maintenance is estimated at $100. In subsequent years the maintenance cost will increase by $50 per year. (a) How much would need to be set aside now at 8% interest to pay the maintenance costs on the tractor for the first 6 years of ownership? (b) What are the advantages and disadvantages of electric powered riding mowers?5. A certain manufacturing plant is being sold and was submitted for bidding. Two bids were submitted by interested buyers. The first bid offered to pay P200,000 each year for 5 years, each payment being made at the beginning of each year. The second bidder offered to pay P120,000 for the first year, P150,000 the second year, P180,000 the third year P200,000 each year for the next 2 years, all payments being made at the beginning of each year. If money is worth 12% compounded annually, which bid should the owner of the plant accept? Show cashflow diagram.
- Compute the rate of return on the $40,000 investment that yields a recurring benefit of $5,000 every other year starting 1 year from now and a benefit of $2,500 every other year starting 2 years from now. (ANS: 9.52%) How to solve this?Mr. Rahim is planning to pursue MBA studies. Initial inquiry shows that he will have to pay RM 25,000 as tuition fee, buy books for RM 1,000, and pay for transport RM 1,000. The MBA study programme will extend over 15 months. Mr. Rahim is working now with a salary of RM 2,500 per month. Being a full time student, he will have to forego the income from his present job for the period of study. Work out: (a) Financial cost, and (b) the Economic Cost of doing MBA (Hint: Identify implicit costs and explicit costs)15) If money has a time value, then the future value will always be more than the original amount invested. Select one: True False 16) A series have the receipts in year 1 =$ 80000. If the Fees are expected to increase uniformly to a level of $200,000 in nine years. What is the possible value for the gradient? Select one: a. $20000 b. $ 15000 c. $ 30000 d. $ -20000 17) In a cash flow series regarding the gradient: Select one: a. Uniform gradient signifies that an income or disbursement changes by the same amount in each interest period b. Either an increase or decrease in the amount of a cash flow is called the gradient c. The gradient in the cash flow may be positive or negative d. All of the above is correct