What is the future value of your house after 30 years? Note. Use formula FV=PV(+r)" to find this figure. Note. Assume that the annual growth rate of the real estate market over the n = 30 years period is the same and equal to r = 5%.
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PV =831,111.59
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- 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 $157.7XYZ corporation has budgeted P300,000 per year to pay for labor over the next five years. If thecompany expects the cost of labor to increase by P10,000 each year, what is the expected cost ofthe labor in the first year, if the interest rate is 10%Suppose the Internal Rate of Return (IRR) of this investment opportunity is 15%. Based on this information alone, should Limitless Ltd. make the investment? Why? Would this decision be consistent with that from B? Explain your reasoning. Suppose that, instead of paying the initial £500,000 now, Limitless Ltd. decides to pay it in equal instalments over the next 10 years. How much would the company need to pay each year to make all these payments equivalent to £500,000 today? Now assume that an alternative project would generate immediate (time zero) net profits of £500,000 upfront, but after that, it would result in annual losses of £120,000 over the next five years, and then the annual losses of £60,000 over the following five years. The cost of capital is 12% and the IRR is 15%. Should you start this project? Explain your reasoning. Would you make the same decision based on NPV and IRR? Why?
- Now suppose you invest in both a factory and the research for the production of Green jetpacks. Look at the factory and research as a total investment. Calculate the net present value (NPV) before tax on the investment based on the following information: The investment cost is paid in full in quarter 0, and the cost of the factory is 100000 while the cost of the research is also 100000. The factory has a lifetime of 20 quarters (5 years) and the value of the factory at the end of quarter 20 is 0 Only green jetpacks should be produced at the factory throughout its lifetime. There is no investment in research to streamline production or material consumption. Suppose the quarterly demand in the market is constant and given at P = 338 - 0.018 * Q, where P is price and Q is the number of jetpacks in demand. There are 5 competitors in the market (including you), and all sell the same number of jetpacks each quarter at the price of 248 each. You produce as much as you sell. The costs…Suppose you bought a condo for $100,000 financing it with a $20,000 down payment of your own funds and an $80,000 mortgage loan from a bank. Now, instead of (a) or (b), suppose the value of the condo fell from $100,000 to $70,000. Assuming you paid $100,000, financing it with $20,000 of your own money and $80,000 with a mortgage loan, and ignoring interest and other costs, calculate your rate of return on your asset (ROA) and your rate of return on equity (ROE). What is the value of your equity stake in the condo after the price fall?You are considering investing in ICI. Suppose ICI is currently undergoing expansion and is not expected to change its cash dividend while expanding for the next 4 years. This means that its current annual $3.00 dividend will remain for the next 4 years. After the expansion is completed, higher earnings are expected to result causing a 30% increase in dividends each year for 3 years. After these three years of 30% growth, the dividend growth rate is expected to be 2% per year forever. If the required return for ICI commonstock is 11%, what is a share worth today?
- 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%Fatima is an owner of a building and she can lease her building for 100,000 AED per year for two years. The explicit cost of maintaining the building is 30,000 AED, and the implicit cost is 50,000AED. All revenues are received, and costs borne, at the end of each year. If the interest rate is 10 percent, determine the present value of the stream of Accounting Profits? Economic Profits?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.
- Assume r = 0.1 is the present real interest rate and this rate is expected to prevail for the next 2 years. The monetary return (i.e. marginal revenue product) on machine A is expected to be R1 = $100,000 for year 1 and R2 = $50,000 for year 2. The present discounted value (PDV) of the net revenue flow from machine A to its owner is equal to ???Although appealing to more refined tastes, art as a collectible has not always performed so profitably. During 2003, Sotheby’s sold the Edgar Degas bronze sculpture Petite Danseuse de Quatorze Ans at auction for a price of $10.45 million. Unfortunately for the previous owner, he had purchased it in 1999 at a price of $12.89 million. What was his annual rate of return on this sculpture?Microsoft company is considering an investment project which costs $3 million today and its payoff wouldbe $5 million at the end of year 7. If the interest rate is 9%, should Microsoft invest in the new project?
