You have an opportunity to invest in a FinTech start up. You will have to make two annual payments - $1,000 today and $1,000 one year from now. You expect to receive $1,100 per year for 3 years beginning 1 year from today. What is your expected annual return on this investment?

You have an opportunity to invest in a FinTech start up. You will have to make two annual payments - $1,000 today and $1,000 one year from now. You expect to receive $1,100 per year for 3 years beginning 1 year from today. What is your expected annual return on this investment?

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 20EA: Towson Industries is considering an investment of $256,950 that is expected to generate returns of...

See similar textbooks

Related questions

Q: À firm has had the following earnings history over the last five years: Year 2020 2019 2018 2017 201...

A: Dividend The dividends are the returns provided to the shareholders by the company. The dividends ar...

Q: culate the required rate of return for Campbell Corp. common stock. The stock has a beta of 1.3, and...

A: The minimum profit (return) that an investor must seek or obtain in exchange for taking on the risk ...

Q: Dorpac Corporation has a dividend yield of 2.3%. Dorpac's equity cost of capital is 8.2%, and its ...

A: The Gordon growth model states that the stock price can be calculated by discounting all the future ...

Q: Find the C.I of the following when P= $10,000, r =6% and n = 10 years

A: Note: This post has two distinct questions. The first has been answered below.

Q: 7-72 A diesel generator for electrical power can be pur- chased by a remote community for $480,000 a...

A: A Diesel generator for electrical power can be purchased by a remote community= $480000 Time= 10 yea...

Q: Situation: 6 evlenaT aeanepre wet e niog Selling Price: P 1,700 Fixed expenses Selling and administr...

A: We can calculate the contribution by applying the formula. The contribution is the difference betwee...

Q: 0. Devon takes out a loan of $1,500, at 5 1 2% simple interest, for 53 months. What is the maturi...

A: Maturity value can be calculated by using this equation Maturity value =Principal*(1+rate*time)

Q: Statement of Financial Position Bolton Ltd for years 2019, 2020 and 2021 2019 2020 2021 Non-current ...

A: The relationship between two figures from two different balance sheet dates is represented by ratios...

Q: Sid has made deposits of 960 at the end of every 6 months for five years. If interest is 5% compound...

A: Compound interest refers to the interest which is earned on the amount of interest itself. The conce...

Q: Which is false about long-term sources of a firm’s capital? a. Preferred shares are securities whos...

A: Solution:- Long term sources of capital are those sources of funds from where the funds are acquired...

Q: You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic f...

A: Net present value is the most important capital budgeting technique which helps in the decision maki...

Q: An IOU agreement was made between two persons. For a face value of P100,000, it was agreed that the ...

A: A bond is an instrument that obligates the issuer to pay the buyer pre-determined interest. The bond...

Q: a The value of an investment account has a doubling time of 13 years and $35,000 was originally depo...

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one...

Q: A university student painter is considering the purchase of a new air compressor and paint gun to re...

A: The term net present value, or NPV, refers to the current total worth of a future stream of payments...

Q: • Define concept of corporate governance and how important to international financial markets? Outli...

A: International financial markets is defined as the market place, where the financial wealth are trade...

Q: DD Plc is expected to declare earnings per share of £1.60 next year. The company historically has re...

A: Present value of growth opportunities is calculated using the current market price of stock and earn...

Q: A contract calls for a payment of P 1,200 at the beginning of each month for 12 months. At what rate...

A: Compound interest is interest calculated on the deposit or loan's original principal with any accum...

Q: Red Company is coming up with an investment that pays 8% interest compounded semiannually. What is t...

A: Effective Annual rate refers to the rate earned on savings account where compounding is done over a ...

Q: A bond with 5 years to maturity and a coupon rate of 6% and face value of $20,000. If the required r...

A: The market price of the bond is calculated as present value of cash flows of bond

Q: The option is currently a.) In-the-money b.) At-the-money c.) Out-the-money 2.) In/At/Out- the m...

A: The call option give opportunity to buy the currency at the specified price and at specific date but...

Q: A 12-year bond has a 9 percent annual coupon, a yield to maturity of 8 percent, and a face value of...

A: The bond price is calculated as sum of present value of cash flows

Q: You want to be able to withdraw $35,000 from your account each year for 20 years after you retire. Y...

A: Solution:- When an equal amount is withdrawn or deposited for a number of periods, it is called annu...

Q: Explain and assess the view that rights issues are designed to protect the interests of shareholders...

A: Every corporation has a hierarchical system of rights for the three types of securities it issues: b...

Q: You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic f...

A: The value of any project or Investment is equal to present value of all future free cash flows over ...

Q: Assume that you have just won the lottery. Lotto officials offered you the choice of two alternative...

A: Solution:- Every rational individual will select that option, the present value of which is higher. ...

Q: 23. On 34 June, 2011 future with series "RIL (250), July" is purchased by Mr. Avinash and sold by Mr...

A: The initial margin will be calculated by taking deposit percentage with an Exercise price. We will c...

Q: If Dr. Superhook uses IRR to evaluate its opportunities, under what values of the discount rate woul...

A: Internal rate of return (IRR) refers to the rate of an opportunity at which the Net present value (N...

Q: What should the monthly payments be if Leons is to earn 15% compounded monthly on its account receiv...

A: A stream of equal cash flows paid or received periodically is termed as annuity. Annuity is either r...

Q: GT Cap. Corp. will be issuing 5-year P20,000,000-face value bonds at an issue price equal to face. I...

A: The cost which the issuer of bonds need to pay before considering taxation benefit is called the YTM...

Q: Patrick was offered a job with a choice between two salary options. Option A: Starts at $10.00 per ...

A: The future value shows the value of the money at a predetermined time in the future and is used by i...

Q: Find i (the rate per period) and n (the number of periods) for the following annuity. Monthly deposi...

A: Monthly deposit = $220 Period = 9 Years Interest rate = 7% Number of periods per year = 12

Q: Here is Eric's credit card statement for the month of August. Transaction Date Transaction amount Au...

A: Here, Beginning Balance is $1,500.25 Purchase on Aug 10 is $68.09 Purchase on Aug 14 is $570.70 Purc...

Q: Padma's semi-annual premium is $975.00. She has the choice of paying the full amount or paying half....

A: Insurance is one of the ways to reduce the risk. Insurance means get put the insurer in same financi...

Q: The following facts apply to your company: Target capital structure: EBIT: Assets: Tax rate: Cost of...

A: Given: Target capital structure Debt 50% Equity 50% EBIT 200,000,000.00 Assets 500,...

Q: The current yield on a bond worth P800 with a par value of P1,000 and a coupon rate of 12% is

A: Current yield can be calculated by using this equation Current yield of bond =Coupon payment/current...

Q: ABC Co. can issue P1,000 par value bond that pays P100 per year in interest at a price of P980. The ...

A: Bond price implies for the consideration paid by an investor for acquiring bond. In provided case, b...

Q: 1. Calculate the required rate of return on equity National Co. as of the beginning of Year +1 using...

A: Here,

Q: calculate the missing information.

A: A promissory note is a type of instrument issued between two parties in a written form for some ...

Q: A contract calls for a payment of P1,200 at the beginning of each month for 12 months. At what rate ...

A: The compound interest is obtained by multiplying the initial the principle amount by one, subsequent...

Q: firms, Candy and Yelpful, have identical assets and generate identical cash flows. Candy is an all-e...

A: According to MM Proposition the capital structure has no impact on the value of firm and value of th...

Q: We have all heard of Return on Investment or (ROI). Please research and describe five other business...

A: To determine the success of a business plan and of the business that has been operational because of...

Q: Repay Principal and Interest on a $1000 mortgage. Annual Term of Mortgage (years) rate () (r) 10 15 ...

A: The mortgages are paid by the monthly payment that are paid by that carry the payment for interest a...

Q: Please show full working a. What is the portfolio mean & variance (arithmetic only): i. For an equal...

A: Given: Date YUM ZTS AAPL Market 31/01/18 84.59 76.73 87.3 1251.42 28/02/18 81.38 80.86 75.74 ...

Q: Altoona Company is considering replacing a machine with a book value of P200,000, a remaining useful...

A: Given: Cost of machine = P320,000 Life = 4 Savings operating cost = P100,000 Tax = 40%

Q: National Co. recently completed a 3-for-1 stock split. Prior to the split, the company had 10 milli...

A: A 3 for 1 stock split means that every share is converted into 3 shares. This increases the number o...

Q: 3. Time Value of Money Assume that ten years from now, you will need $10,000 and that your bank comp...

A: The concept of the time value of money states that money today has more value than the same amount i...

Q: A man bought a condominium unit worth ₱3.9M a pay a down payment of ₱1.5M and agreed to pay the rema...

A: The 1st installment is paid at the end of the 2nd year. Present worth = present value

Q: Compute the Indirect and Direct Quotations of the following Exchange Rates. Swedish Krona = ?

A: Here,

Q: Task 2. Compute the future value of the following single investments: 1. P20,000 at 8% interest comp...

A: Compound interest: It is the interest on a loan or deposit Compound interest is calculated based...

Q: Why dividen yield ratio increase while dividend payout ratio decrease? please explain in terms of in...

A: Dividend Yield ratio: It is the ratio will be used to calculate the ratio of dividen...

Question

How in the world do I solve this one with my HP 10bll calculator? Do I use IRR/YR? What do I use? I feel like I am missing information

You have an opportunity to invest in a FinTech start up. You will have to make two annual
payments - $1,000 today and $1,000 one year from now. You expect to receive $1,100 per year for
3 years beginning 1 year from today. What is your expected annual return on this investment?

Definition Definition Discount rate of a project wherein its net present value equals zero. Internal rate of return equates the present value of future cash flows with the initial investments. Internal rate of return helps to determine nominal cash flows.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Towson Industries is considering an investment of $256,950 that is expected to generate returns of $90,000 per year for each of the next four years. What Is the Investments internal rate of return?
How much must be invested now to receive $30,000 for 10 years if the first $30.000 is received one year from now and the rate is 8%?
If a copy center is considering the purchase of a new copy machine with an initial investment cost of $150,000 and the center expects an annual net cash flow of $20,000 per year, what is the payback period?
Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
Conestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?
If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?
Redbird Company is considering a project with an initial investment of $265,000 in new equipment that will yield annual net cash flows of $45,800 each year over its seven-year life. The companys minimum required rate of return is 8%. What is the internal rate of return? Should Redbird accept the project based on IRR?
A grocery store is considering the purchase of a new refrigeration unit with an Initial Investment of $412,000, and the store expects a return of $100,000 in year one, $72000 in years two and three, $65,000 in years four and five, and $38,000 in year six and beyond, what is the payback period?
Bouvier Restaurant is considering an investment in a grill that costs $140,000, and will produce annual net cash flows of $21,950 for 8 years. The required rate of return is 6%. Compute the net present value of this investment to determine whether Bouvier should invest in the grill.
How much would you invest today in order to receive $30,000 in each of the following (for further instructions on present value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%