INVESTMENT ANALYSIS Jorge has decided to invest at most
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Chapter 4 Solutions
Finite Mathematics For The Managerial, Life, And Social Sciences
- What interest rate would you need to get to double an investment of 200 in eight years?arrow_forwardDuffin House, Higgins Press, and Sickle Publications all went public on the same day recently. John O'Hagan had the opportunity to participate in all three initial public offerings (partly because he and Marjory Duffin are good friends). He made a considerable profit when he sold all of the stock 2 days later on the open market. The following table shows the purchase price and percentage yield on the investment in each company. Purchase Priceper Share ($) Yield (%) Duffin House (DHS) 8 20 Higgins Press (HPR) 10 15 Sickle Publications (SPUB) 15 15 He invested $25,000 in a total of 2,600 shares and made a $4,350 profit from the transactions. How many shares in each company did he purchase? Duffin House shares Higgins Press shares Sickle Publications shares I have x+y+z=2600 8x+10y+15z=25,000 160x+150y+225z=435,000 i keep getting y=506, i know im doing something wrong :(arrow_forwardAt the end of 2009, right after the great recession of 2008-2009, business partners Mario and Luigi sold their plumbing business and retired. Each of them received $1,000,000 net from the sale. Mario holds an undergaduate business degree and understands risk, return, and divesification. He decides to invest his 1M$ in SPY ETF (essentially a stock that tracks the S&P 500 index performance). Luigi comes from a low income family and could not afford to go to college. He doesn't understand finance and he fears risk, so he decides to put his money in a bank savings account. The average S&P500 annual return from 2010 to 2019 has been 11.3%, the average annual return on a standard savings account has been 0.1% over the last 10 years. What is the difference in FV value (end of 2019) between Mario and Luigi investment holdings?arrow_forward
- You are a rising star in the music industry and you have just received word that you will be rewarded with a $500,000 bonus this year. As your chauffeur drives you home in the company's limousine, you call your accountant, who suggests investing your bonus in a high-yield account offering 12.6 % continuous interest. A friend you knew in college, however, wants you to invest your bonus in his restaurant business, and has promised 12.6 % interest, compounded quarterly. You want to compare both accounts before making a decision, so you crunch the numbers to find out: HOW LONG WILL IT TAKE TO EARN AN EXTRA $100,000? WHEN WILL THE ACCOUNT HAVE $750,000? HOW LONG WILL IT TAKE TO DOUBLE MY MONEY? HOW LONG WILL IT TAKE TO TRIPLE MY INVESTMENT?arrow_forwardkindly answer item (a)arrow_forwardYou are considering in investing one of the two options: Investment A requires a $80,000 upfront payment and generates $59,000 annually, Investment B requires a $68,000 upfront payment. How much should Investment B generate annually so that the total returns from Investment A and B become equal after 3 years?arrow_forward
- Hector has several financial decisions to make in the near future. He is planning to buy a car, open a savings account, and place money in a certificate of deposit (CD) so that he may purchase a boat when he retires. Hector has asked that we help him decide which options are best for him. The car Hector has chosen costs $24,000. Most car loans are calculated using simple interest, a method which interest is calculated only one per year. His first option is a loan with 3% interest over six years. How much will Hector pay over the course of the next six years if he chooses this option?arrow_forwardA city is spending $19.3 million on a new sewage system. The expected life of the system is 40 years, and will have no market value at the end of its life. Operating and maintenance expenses for the system are projected to average $0.8 million per year. If the city's MARR is 7% per year, what is the capitalized worth of the system? The study period is 100 years. The capitalized worth of the system is $ million (Round to two decimal places.)arrow_forwardA building company plans to build a new warehouse. The cost of building the warehouse is an initial investment of 1500 thousand dollars, together with a further 250 thousand dollars at the end of each of the next two quarters. The building company will need to cover quarterly operating cost of 120 thousand dollars at the end of each of the next two quarters (first and second). After completion of the construction by the end of the second quarter, the warehouse will be sold for 2.5 million dollars. Assuming that the annual interest rate is 4% compounded annually, find: (1) The present value of the building costs; (2) The present value of the operating costs; (3) The present value of the revenue; and (4) The internal rate of return of the project. (5) Do you think the company should carry out this project? Give your reason(s).arrow_forward
- Mutual Fund X owns 0.5% of the total stock of Company Y. In one particular year, Company Y announces annual profits of $12,000,000, and decides to pay dividends to its shareholders at a rate of 15% of its annual profits. How much will Mutual Fund X receive in the form of dividends from Company Y? Give your answer in dollars.arrow_forwardYou have owned a certain mutual fund for the last five years. During the first year it grew 6%, during the second year it grew 1.5%, during the third year is grew 2.75%, during the fourth year it grew 5% and last year it lost 2%. Currently the mutual fund has a value of $14219.33. What was your original amount you invested in this account (five years ago)? Show your work if you want partial credit. Hint BE CAREFUL I HAVE GIVEN YOU THE FINAL ANSWER AND WANT THE VALUE THE FIRST YEARarrow_forwardAfter reading this chapter, it isn't surprising that you're becoming an investment wizard. With your newfound expertise, you purchase 100 shares of KSU Corporation for $32.62 per share. Assume the price goes up to $37.93 per share over the next 12 months and you receive a qualified dividend of $0.68 per share. What would be your total return on your KSU Corporation investment? Assuming you continue to hold the stock, calculate your after-tax return. How is your realized after-tax return different if you sell the stock? In both cases assume you are in the 25 percent federal marginal tax bracket and 15 percent long-term capital gains and qualified dividends tax bracket and there is no state income tax on investment income. Your total rate of return on your KSU Corporation investment is (Round to two decimal places.)arrow_forward
- Intermediate AlgebraAlgebraISBN:9781285195728Author:Jerome E. Kaufmann, Karen L. SchwittersPublisher:Cengage LearningAlgebra for College StudentsAlgebraISBN:9781285195780Author:Jerome E. Kaufmann, Karen L. SchwittersPublisher:Cengage Learning