Which of the following sets of Excel entries will correctly solve this problem: Jim paid $138,000 for an old house to renovate. He spent an average of $3,216 per quarter over the next two years as he readied the renovated house for sale. He wants to set the price of the house high enough so that he will earn an annual rate of return of 12% for his investment. Given that information, what price should Jim set on the house?
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Which of the following sets of Excel entries will correctly solve this problem: Jim paid $138,000 for an old house to renovate. He spent an average of $3,216 per quarter over the next two years as he readied the renovated house for sale. He wants to set the price of the house high enough so that he will earn an annual
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- Kenzie purchased a new 3-D printer for $450,000. Although this printer is expected to last for ten years, Kenzie knows the technology will become old quickly and so she plans to replace this printer in three years. At that point, Kenzie believes she will be able to sell the printer for $30,000. Calculate yearly depreciation using the double-declining-balance method.Jerry owns a restaurant and has the opportunity to buy a high-quality espresso coffee machine for $5,000. After carefully studying projected costs and revenues, Jerry estimates that the machine will produce a net cash flow of $1,600 annually and will last for five years. He determines that an interest rate of 10% is an adequate return on investment for his business. Calculate the present value of the machine to Jerry. Based on your calculation, do you think a decision to purchase the machine would be wise?Brooke is evaluating two alternatives for improving the exterior appearance of her Victorian-style house that she is remodeling inside. She plans to keep this as her home for 20 more years. The house can be completely painted at a cost of $16,000. The paint is expected to remain attractive for 5 years, at which time repainting will be necessary. Every time the building is repainted (i.e., in years 5, 10, and 15), the cost will increase by 20% over the previous time. As an alternative, the exterior can be covered with a vintage-appearing vinyl-coated siding now and again 10 years from now at a cost 25% greater than the present cost of the siding. At a MARR of 10% per year, what is the maximum amount that Brooke should spend now on the siding alternative so that the two alternatives will just break even? Solve using factors. The maximum amount that Brooke should spend now on the siding alternative is $ . Note:- Do not provide handwritten solution. Maintain accuracy and quality in…
- Brooke is evaluating two alternatives for improving the exterior appearance of her Victorian-style house that she is remodeling inside. She plans to keep this as her home for 20 more years. The house can be completely painted at a cost of $16,000. The paint is expected to remain attractive for 5 years, at which time repainting will be necessary. Every time the building is repainted (i.e., in years 5, 10, and 15), the cost will increase by 20% over the previous time. As an alternative, the exterior can be covered with a vintage-appearing vinyl-coated siding now and again 10 years from now at a cost 25% greater than the present cost of the siding. At a MARR of 10% per year, what is the maximum amount that Brooke should spend now on the siding alternative so that the two alternatives will just break even? Solve using factors. The maximum amount that Brooke should spend now on the siding alternative is $Chris is considering submitting a bit for the requested project, which involves building four houses per year for the next 3 years for a gated community. To complete such project, Chris would need to buy tools in the amount of $66,000, which would be completely depreciated over the project’s lifespan assuming straight-line depreciation, and such tools can be sold for $40,000 at the end of the project. Net working capital would be $16,000 over the life span of the project. The project’s variable cost would be $88,000 per house, and fixed cost would be $18,000 each year. The tax rate is 34% and Chris’ require rate of return is 14%. How much at minimum Chris should bid for each house? (Rounded to the nearest $500). A. $115,000 B. $98,500 C. $97,500 D. $96,500 E. $95,50You are trying to evaluate the feasibility of purchasing a quarter-acre plot (approximately 11,000 square feet) of agricultural land that has proper drainage and access to paved roads. You plan to rent the plot of land to receive after-tax receipts of US$2,500 per month. You are hoping to sell the land in the next ten years to receive after-tax proceeds of US$2.0 million to purchase a building containing at least four (two-bedroom) apartments. Assume the funds for purchasing the apartment will be drawn from your savings account which is currently earning 2% after taxes and that inflation rate is currently 5%. a) Identify the cash flows, their timing and the required rate of return applicable to calculating the maximum value you should pay for the land. b) Showing all calculations state if you should purchase the land for US$1.6 million, justify your decision. What is the maximum price you should pay to acquire the single dwelling unit?
- You are trying to evaluate the feasibility of purchasing a quarter-acre plot (approximately 11,000 square feet) of agricultural land that has proper drainage and access to paved roads. You plan to rent the plot of land to receive after-tax receipts of US$2,500 per month. You are hoping to sell the land in the next ten years to receive after-tax proceeds of US$2.0 million to purchase a building containing at least four (two-bedroom) apartments. Assume the funds for purchasing the apartment will be drawn from your savings account which is currently earning 2% after taxes and that inflation rate is currently 5%. 1.Showing all calculations state if you should purchase the land for $1.6 million, justify your decision. What is the maximum price you should pay to acquire the single dwelling unit?Dawn is preparing a home office to perform subcontract projects for midsized architect firms. She plans to use $13,000 of her own funds, which currently generate a return of 4% per year. The remainder of financing will be provided by a $9,000 bank loan carrying a 9% per year interest rate. She hopes to realize a return of 3% above the average cost of capital to establish her office, and she realizes that the factors of inflation and risk should also be considered. Her decision is to add another 1.5% per year to compensate for these elements. What is the MARR she should use when evaluating projects? the Marr she should use is __%A businessman bought a building, but the thermal insulation of the roof is not adequate. It was determined that with 6 '' of insulating foam it is possible to reduce the cost of heating by $ 1,500 and air conditioning by $ 2,000 per month. Assuming that the first six months of the year is winter and the next six months are summer, calculate the maximum price of the repair if the building is expected to be maintained for 2 years. The interest rate is 1.5% per month. please put the digram
- You graduate and decide you will start a consulting business out of your home. To perform the basic analysis needed for your field, you need to purchase testing equipment. The seller has 2 prices, one for incorporated businesses ($25,000) and one for individuals ($20,000). The salvage value of this equipment after 4 years is predicted to be $10,000 in both cases. You and your partner are debating whether it is better to pay the higher purchase price and be able to depreciate the asset at a CCA rate of 30%, with the corporate tax rate of 40% OR to just keep them as a personal asset, with a sales tax rate of 10% at the time of sale. If we ignore the big picture arguments to be made here, what are the tax implications involved with each purchase/ sale option?Bill is assessing an investment in one of two studio apartments in Sydney’s Potts Point as rental properties for a 3-year time frame. Each property requires an initial outlay of $200,000 and would be sold at the end of 3 years. Bill expects that at this time he could sell property A for $300,000 and property B for $280,000. He also anticipates an increase in net rental income each year for each property. Property B is older but because of its excellent location he expects to achieve a higher net rental even though its expected sales price is likely to be a bit lower than property B. If Bill did not want to invest in either of the two properties then he would invest the $200,000 in a managed fund of equivalent risk which is expected to pay a rate of return of 7% p.a. The expected net income flows for both properties is shown below: Year 1 Year 2 Year 3 Property A $10,000 $10,250 $10,500 Property B $11,000…Ms. Susan is renovating her townhouse for a total price of $18,000. The work will be done in a month and she will start to rent the house to Mr. Sam with a monthly rental of $1,200. For how long time (in months) can Ms. Susan can break even from the renovation cost? (Complete the analysis in MS Excel Sheet and copy your analysis and answer here). Assume: • The annual maintenance cost is approximately $1,200. • Ms. Susan covers utility and electric bills which are approximately $150 every month. • The interest rate is 0.5%. • Present Value = Future Value/(1+i)^n