Given scenarios represent the economic investment or financial investment.

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Chapter 35, Problem 1RQ

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Given scenarios represent the economic investment or financial investment.

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2. A man is considering investing P500, 000 to open a semi-automatic auto-washing business in a city of 400, 000 population. The equipment can wash, on the average, 12 cars per hour, using two men to operate it and to do small amount of hand work. The man plans to hire two men, in addition to himself, and operate the station on an 8-hour basis, 6 days per week, 50 weeks per year. He will pay his employees P25. 00 per hour. He expects to charge P25. 00 for a car wash. Out-of-pocket miscellaneous cost would be P8, 500 per month. He would pay his employees for 2 weeks for vacations each year. Because of the length of his lease, he must write off his investment within 5 years. His capital now is earning 15%, and he is employed at a steady job that pays P25, 000 per month. He desires a rate of return of at least 20% on his investment. Would you recommend the investment? a) Use ROR method ( b) Use present worth method: c) Use future worth method d) Solve for the payback period and the IRR,

Suppose that the interest rate at which Joanne can borrow and lend is 10 percent per year, but she can earn $22,000 with a high school degree. Her tuition and books at college cost $6,000 and her living expenses are $15,000 per year. Savings are deposited at the end of the year they are earned and receive (compound) interest at the end of each subsequent year. Similarly, the loans are taken out at the end of the year in which they are needed, and interest does not accrue until the end of the subsequent year. Now that the interest rate has risen, should Joanne go to college or go to work?

Please use the graph to answer the questions. Given the market conditions, what will the prevailing interest rate be? O 6% 18% O 2% 10% Given the market conditions, how much money is borrowed in the loanable funds market? O $10 billion. $50 billion O$90 billion O $70 billion $30 billion. Interest rate (%) 18- 16- 14- 12. 10. 8- 6- + et 0 Demand Supply 60 70 80 90 10 20 30 40 50 Quantity of loanable funds (in billions of dollars)