Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Your energy bill is expected to be $250 next month (month 1) and is expected to grow at 0.64% per month for the foreseeable future (aka forever), after your utility provider ran into financial trouble. You read recently that installing solar panels on your roof will reduce your energy bill by 20% (so month 1 would be $200) and decrease the growth of the bill to 0.23% per month for the foreseeable future. Assuming this is true, that you plan to stay in the house for the foreseeable future, and that the applicable discount rate is 11% per year, from a pure financial perspective what is the most you’d be willing to pay today to have solar panels installed immediately? Assume the panels could be installed quickly and the cost savings would start in month 1.
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- A small business has determined that the machinery they currently use will wear out in 17 years. To replace the new machine when it wears out, the company wants to establish a savings account today. If the interest rate on the account is 1.1 percent per quarter and the cost of the machinery will be $255,000, how much will the company have to deposit today?arrow_forwardAt the moment you don't have any money saved for retirement, but have resolved to start making $425 monthly payments (starting one month from today) into an account expected to earn an effective annual rate of 9.9%. Given that plan, how many years will it take for you to accumulate $2.4 million?arrow_forwardSuppose that you earn $45,600 per year. What is your monthly salary? $ Assume that you deposit 10% of your monthly salary into an investment account with an APR of 4.8% every month for 30 years. We will assume for simplicity that your salary never changes, so you are depositing the same amount every month for 30 years. What will the balance of your investment account be after 30 years? Round your answer to the nearest cent. The balance of the account is $ How much of the investment account balance is interest? The amount of interest in the account is $arrow_forward
- You expect that you will need to replace your furnace in 4 years at a cost of $16,716. How much must you save, each month for 30 months, starting next month (the same amount each month) if your savings account pays 2.91% APR (compounded monthly)?arrow_forwardI want to buy a Tesla Model S. in 10 years. The only problem is that it will cost $90,000! how much would I have to deposit each month into a savings plan offering 5.6% APR in order to have enough saved to buy the car in 10 years? What percent of the total amount saved will come from interest if I go with the monthly savings plan?arrow_forwardA real estate property is on the market. You have estimated it will give you net cash flows of $5136 per month. You hope to sell it in 9 years for $308182. Your required return is 9.46%, how much should you be willing to pay for the property today? Answer:arrow_forward
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