Alexander will take a trip using $5500 of his investment funds that return 8% per year. To pay for the trip, he will also get a loan of $10000 at 6.5% per year interest over 6 years to cover the estimated costs. What is the WACC?
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- Your goal is to spend a year traveling around the world. You assume that it will cost $100,000 to accomplish this goal and you have 10 years to save for it. You presently have $10,000 to invest. What annual rate of compounding interest must you earn on your investment to cover the cost of this trip?Yang is considering buying an asset that, starting 5 years from now, will pay $10,000 per year forever. Assume that the required return is 7.25%. What is the most Yang should pay for this asset?Zachary has purchased an investment that he expects to produce income of $3,000 at the end of the first year and $4,000 at the end of the second year. If he requires an 8% rate of return compounded annually, what is the maximum amount that he can pay and still earn the required rate of return?
- You are scheduled to receive $5,000 in two years. When you receive it, you will invest it at 6.5 percent per year. How much will your investment be worth eight years from now? Can the excel and calculator solutions be provided?Alex wants to buy a shopping complex in Vancouver 3 years after completing his Masters. The complex will cost CAD 17,000,000 and he would need a 20% down payment after 5 years. To save for the down payment, Alex could deposit one lump sum today at a 6% annual compound rate. Alternatively, Alex can wait one year and make one lump sum deposit. Will Alex need more money to deposit if she does it now or after one year? How much more is required? (Use Formula Approach)Your savings account currently has $300,000. You would like to withdraw $40,000 a year for the next 5 years to cover living expenses while you endure a PhD program. If the account is expected to earn an annual rate of 10%, how much will you have left in your account once you finish the program? please break down
- Lungu wants to buy a Car that costs K25,000. He has saved K6000, which he will use as deposit, and he will finance the rest of it by taking out a loan to be paid back in equal installments, mortised over 6years at an annual interest rate of 12%. What will his payment be? You have estimated that your vehicle will need to be replaced 10 years from now at a cost of K120, 000. If the interest rate is fixed at 10%, how much do you need to set aside every three months to provide for that money 10 years from now? You plan to invest K10, 000 on the first day of every year for the next 6 years. If the interest rate on the investment is 8%, how much would the investment be worth at the end of the 6th year? Telemundo Ltd. borrows K100, 000 from AB bank. The loan is to be repaid in 1year with periodic payments made at the end of each month. The lender charges 20% interest per annum. Calculate the monthly charge and construct the amortization schedule for the first FIVE (5) repayments on this loan.An engineer received a bonus of $12,000 that he will invest now. He wants to calculate the equivalent value after 24 years, when he plans to use all the resulting money as the down payment on an island vacation home. Assume a rate of return of 9%% per year for each of the 24 years. Find the amount he can pay down, using the tabulated factor, the factor formula, and a spreadsheet function. B)Anood invests $10,000 in a fund that pays 9% compounded annually. If she makes 11 equal annual withdrawals from the fund, how much can she withdraw if the first withdrawal occurs 1 year after her investment?Manny Kurr is considering the purchase of a beauty salon. The initial cost of this purchase is $16,000. The after-tax cash flows from this investment should be $4,000 per year for the next 5 years. His opportunity cost of capital is 10 percent. Calculate the following:a. Payback—Should Manny buy the beauty salon based on payback if hisrequired payback is less than 3 years?b. The present value of the benefits (PVB),c. The present value of the costs (PVC),d. The net present value (NPV )—Should Manny buy the beauty salon based on NPV rules?e. Profitability index (PI )—what does the profitability index mean in terms of buying the beauty salon?f. Internal rate of return (IRR), (Hint: Use interpolation)—should Manny buythe beauty salon based on IRR rules?g. Accounting rate of return (ARR)—Should Manny buy the beauty salon based on the ARR? (please answer e,f, & g)
- You are considering buying a condo as an investment property. The condo will generate $20,000 a year for 10 years in rent, after which you expect to sell the property for $275,000. What is the maximum you should pay for the property if your cost of money is 7%?Manny Kurr is considering the purchase of a beauty salon. The initial costof this purchase is $16,000. The after-tax cash flows from this investmentshould be $4,000 per year for the next 5 years. His opportunity cost of capitalis 10 percent. Calculate the following:a. Payback—Should Manny buy the beauty salon based on payback if hisrequired payback is less than 3 years?b. The present value of the benefits (PVB),c. The present value of the costs (PVC),d. The net present value (NPV )—Should Manny buy the beauty salon basedon NPV rules?e. Profitability index (PI )—what does the profitability index mean in terms ofbuying the beauty salon?f. Internal rate of return (IRR), (Hint: Use interpolation)—should Manny buythe beauty salon based on IRR rules?g. Accounting rate of return (ARR)—Should Manny buy the beauty salonbased on the ARR?Paolo is considering purchasing a Sunlife Capital investment. Paolo will receive P1,000 every three months for the next two years if he purchases the investment. He would make the first P1,000 payment as soon as he purchases the investment. How much should Paolo be willing to pay for this investment if his required rate of return is 16%? * P1,345.60 P10,764.80 P7,002.05 P1,368.57