The mine that will last for 20 years gives an income of P 60,000 per year. If the investor desires 8% yield on his investment and will accumulate a capital replacement fund at 5%.. Find the value that the investor must pay for the mine. Show your solution.
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- Suppose a company had an initial investment of $40,000. The cash flow for the next five years are $19,000,$19,000,$15,000,$19,000, and $16,000, "respectively. The interest rate is 11%. What is the discounted payback period? (Enter only whole numbers)Consider a bond with a face value of $2,000 that pays a coupon of $150 for 10 years. Suppose the bond is purchased at $500, and can be resold next year for $400. What is the rate of return of the bond? 10% 0% -10% 20%A young couple has made a nonrefundable deposit of the first month's rent (equal to $1000) on a one-year apartment lease. The next day they find another apartment that they like just as well, but its monthly rent is only $900. They plan to be in the apartment for a year. Should they switch to the new apartment? Assume an (annual) interest rate of 12%. Select one: True False
- Suppose a bank grants a loan to one customer for a term of five years. The customer promises the bank an annual interest payment of 10 percent. The face (par) value of the loan is $1,000 which is also the current market value as the loan’s current YTM is 10 percent. What is the loan’s duration?Consider a bond with a face value of $2,136 that pays a coupon of $100 for 10 years. Suppose the bond is purchased at $400, and can be resold next year for $450. What is the rate of return of the bond? a. 1.125% b. 1.375% c. 25% d. 37.5%An owner can lease her building for $150,000 per year for three years. The explicit cost of maintaining the building is $50,000, and the implicit cost is $65,000. 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: a. Accounting profits. $ b. Economic profits. $
- 8. Question 1 Fatu took out an endowment policy. The first annual payment was Rx, whereafter it increased yearly by R1 700. After 20 years the policy paid out R1 005 962. The applicable yearly interest rate is 10%. The value of x is approximately A. R11 816. B.R17 564. C.R6 500. D.R564. Question 2 Daniel asks to reschedule the compensation in three payments,the first payment now ,the second payment twice the size of the first payment for four years from now and the third payment three times the size of the first payment nine years from now.The boxing fund agrees on condition that the interest rate changes to 10.95% per year compounded monthly .The amount to the nearest hundred rand that Daniel can expect to receive four years from now is A R 864 000 B.R 557510 C.184 800 D.369 600A stock you are evaluating is expected to experience supernormal growth in dividends of 12 percent over the next three years. Following this period, dividends are expected to grow at a constant rate of 4 percent. The stock paid a dividend of $1.50 last year and the required rate of return on the stock is 11 percent. Calculate the stock's fair present value. (Do not round intermediate calculations.) Please show all the steps, including the equation(s).Show complete solution David won a lottery worth $10,000,000. He has opted for an annuity payment at the end of each year for the next 20 years as a payout. Determine the amount that David will be paid as annuity payment if the ongoing rate of interest in the market is 5%. Determine what is the Lumpsum if David decides to withdraw everything at the end of 20.
- Give typing answer with explanation and conclusion A piece of equipment now is use at a plant has a market value of 12,000. This market value is expected to decline by 40% per period (from the previous period) until it reaches zero at the end of period 4. The forecasted operating and repair cost of the equipment for the next period is 35,000 and this is expected to grow at a rate of 20 percent per period. Applying an interest rate of 12%, answer the questions below. a. What is the lowest period equivalent cost for keeping the equipment in operation for the economic service life? b. What is the economic service life?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:As a manager of your company, you are considering to go for a project, with an initial outlay of $200,000. The project has a life of three years and yields (year-end) cash inflows of $ 100,000 in year-1, $150,000 in year-2 and $200,000 in year 3. What is the net present value of the project if the interest rate is 10 percent? Show your steps. Should you recommend to go for the project? Explain in details.