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- You have been offered a unique investment opportunity. If you invest $10,000 today, you will receive $500 one year from now, $1,500 two years from now, and $10,000 ten years from now. a. What is the NPV of the investment opportunity if the interest rate is 8% per year? Should you take the opportunity? b. What is the NPV of the investment opportunity if the interest rate is 4% per year? Should you take the opportunity? a. What is the NPV of the investment opportunity if the interest rate is 8% per year? The NPV of the investment opportunity if the interest rate is 8% per year is $. (Round to the nearest dollar.) Should you take the investment opportunity (Select the best choice below.) A. Reject it because the NPV is less than 0. B. Take it because the NPV is equal to or greater than 0. b. What is the NPV of the investment opportunity if the interest rate is 4% per year? The NPV of the investment opportunity if the interest rate is 4% per year is $ (Round to the nearest dollar.) Should…You are looking to invest in a real-estate property to rent out that will cost $100,000. The property is expected to produce annual rent cash flows of $9,000 in Year 1, $7,400 in Year 2, and $8,800 in Year 3, at which point you will sell the property for $91,000.00, if your bank quotes you a mortgage rate of 5.25% per year what is the dollar return you can expect on your investment? Additionally, should you buy the property? a. 2,911.06, do not buy the property b. -$787.99 buy the property c. 787.99, buy the property d. -2,911.06, buy the propertyAn investor has an opportunity to buy a commercial property and to sell it after 15 years. Rents from the property will be $24,000 and he expects them to increase at a rate of 3% per year annually. His required rate of return on this investment is 12%. At what price would he be indifferent to buying or not buying the investment? Round off to the nearest $1. Select one: O a. $213,656 O b. $800,000 O c. $171,429 O d. $240,000
- Suppose you buy a machine and you have the option of paying the full price, $40,000, now; or $10,000 at the end of each of the next five years. What is the cost of capital, or the implied interest rate, for the two methods to be equivalent?You are considering a safe investment opportunity that requires a $1,450 investment today, and will pay $950 two years from now and another $710 five years from now. a. What is the IRR of this investment? b. If you are choosing between this investment and putting your money in a safe bank account that pays an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR with the IRR of the investment? Explain. a. What is the IRR of this investment? The IRR of this investment is %. (Round to two decimal places.)You are going to buy a yard at Marina Bay. The price of the yard is RM120,000. You are going to pay 10% down payment. You have two options to finance your purchase: Option1 : Borrow from Bank A10 year loan at 12% interest rate. The loan will be paid in 30 equal payment. Option 2: Borrow from Bank B20 year loan at 10% interest rate. The loan will be paid in 40 equal payment. Which bank gives better offer?
- You are considering a safe investment opportunity that requires a $1,080 investment today, and will pay $710 two years from now and another $610 five years from now. a. What is the IRR of this investment? b. If you are choosing between this investment and putting your money in a safe bank account that pays an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR with the IRR of the investment? Explain. a. What is the IRR of this investment? The IRR of this investment is _____________%. (Round to two decimal places.)A businessman plans to purchase a new house costing P500000. He can raise the building by issuing a 10%, 25 year old bond that would pay P150000 interest per year and repay the face amount at maturity Instead of buying the new house, he has the option of leasing it for P140000 per year, the first payment due one year fron now. The building has an expected life for 25 years, If interest charge for leasing is 8%, which is more favorable for the businessman, borrow and buy or lease?You bought an apartment. Its market value as of today is 150 000 zł. Each year you can get 15 000 zł for renting outthis apartment. In addition, each year, the market value of this apartment increases by 10 000 zł. An alternative to thisinvestment is to buy obligations, which will give 12.5% each year. After how many years will you sell the apartment?
- You are considering a safe investment opportunity that requires a $1,410 investment today, and will p $780 two years from now and another $830 five years from now. a. What is the IRR of this investment? b. If you are choosing between this investment and putting your money in a safe bank account that pa an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR wit the IRR of the investment? Explain. a. What is the IRR of this investment? The IRR of this investment is %. (Round to two decimal places.)Assume the annual effective interest rate is i = 2%. An individual wants to invest a capital of £100,000 and is contemplating two projects:Project A. She buys a property for exactly £100,000 at time t = 0 that will generate income from rent. a)If rent is paid monthly in advance and each payment is £700, how long will it take before the present value of rental payments exceeds the initial cost of purchasing the property? b)To be more realistic assume that rent increases every three years at a rate of 1% effective per annum compound, and taxes are paid at 20% on rental income. Moreover, maintenance work for the property will cost £1,500 to be paid at the end of every 5 years (and these are not subject to tax relief). If rental payments stop after 15 years, what is the net present value (at time t = 0) of all cash flows for 15 years? (Include maintenance costs paid at t = 15 years.)Jim Nance has been offered an investment that will pay him $860 three years from today. a. If his opportunity cost is 9% compounded annually, what value should he place on this opportunity today? b. What is the most he should pay to purchase this payment today? c. If Jim can purchase this investment for less than the amount calculated in part (a), what does that imply about the rate of return that he will earn on the investment?
