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- You dream of endowing a chair in finance at the local university that will provide a salary of $150,000 per year forever, with the first cash flow to be one year from today. If the university promises to invest the money at a rate of 5.5% per year, how much money must you give the university today to make your dream a reality?1. Your client Bob has sent you an email asking for help figuring out how long his money will last. Bob explains in his email that he wishes to spend $80,000 per year. He assumes his investment assets will grow at a 6% annual rate. You take a look at Bob's client profile and see that he is 60 years old and has $1,200,000 of investable assets. Solve on a financial calculator6) Suppose two entrepreneurial engineers have an idea for a new product that they plan to launch 3 years from now. In three years, each engineer will need $10,000 to purchase equipment needed during that launch year. If each engineer wants to save enough money over the next three years to have $10,000, how much should be invested each year if the interested rate is 7%? Draw the cash flow diagram from the perspective of the engineers.
- Your friend is considering investing $10,000 starting at the end of year 1 in an investment account and this cash flow will then grow at an annual rate of 4%. She plans on ending her contribution to the investment account at the end of year 10. If the annual return on the investment account is expected to be 10%, the future value of this investment at the end of year 10 will be closest to: O $166,667. O $71,550. $185,583. $100,000.I am looking for the Excel formulas for this. Oakley saves up her money to buy a retail center for $1.2 million. She expects to hold on to it for the next 5 years and then will sell it for $1.9 million. Her cash flow in year 1 will be $120,000 with a 7% escalator over the next 5 years. Assume that the required rate of return is 14%. What is the NPV of this investment? What is the NPV if the escalator is only 5% per year? What is the NPV if she can only sell the retail center for $1.5 million AND a required rate of return of 15%? (5% escalator)as à financial planner. A couple has asked you to put together an investment plan for the education of their daughter. She is a bright seven-year-old (her birthday is today), and everyone hopes she will go to university after high school in 10 years, on her 17th birthday. You estimate that today the cost of a year of university is $16,500, including the cost of tuition, books, accommodation, food, and clothing. You forecast that the annual inflation rate will be 5.4%. You may assume that these costs are incurred at the start of each university year. A typical university program lasts 4 years. The effective annual interest rate is 6.65% and is nominal. a. Suppose the couple invests money on her birthday, starting today and ending one year before she starts university. How much must they invest each year to have money to send their daughter to university? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Investment per year $ b. If the couple waits 1 year,…
- SOLVE the following:i. Suppose that your five-year old daughter has just announced her desire toattend college. After some research, you determined that you will need aboutRM 100,000 on her 18th birthday to pay for four years of college. If you canearn 8% annually on your investments, how much do you need to invest todayto achieve your goal?ii. Suppose you have an extra RM100 today that you wish to invest in for oneyear. If you can earn 10% per annum on your investment, how much will youhave in one year?You see an opportunity to invest $1 million in a business. The investment is expected to generate a cash flow of $250000 per year over the next five years. Assuming a discount rate is 5%, would it be a sound decision to invest in this business?A small start-up biotech firm anticipates that it will have cash outflows of $200,000 per year at the end of the next 3 years. Then the firm expects a positive cash flow of $50,000 at the EOY 4 and positive cash flows of $250,000 at the EOY 5–9. Based on these estimates, would you invest money in this company if your MARR is 15% per year? (all sections).
- Use the following information to answer the question below. Nielson Motors is considering an opportunity that requires an investment of $1,000,000 today and will provide $250,000 one year from now, $450,000 two years from now, and $650,000 three years from now. Consider a growing perpetuity that will pay $100 in one year. Each year after that, you will receive a payment on the anniversary of the last payment that is 6% larger than the last payment. This pattern of payments will continue forever. If the interest rate is 11%, the value of this perpetuity is:Laura is hoping that an investment of $30,200 will provide additional revenue to the store of $18,100 per year for 3 years. Her partner in crime, Kevin, is confident that a larger investment of $40,000 will be required to bring in a steady flow of $23,200 in new revenue per year for 3 years.Determine the discounted payback period for each investment (using before-tax cash flows). The company’s required rate of return is 9%. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 2 decimal places e.g. 15.25.)Click here to view the factor table Laura Kevin Discounted payback period enter discounted payback period rounded to 2 decimal places years enter discounted payback period rounded to 2 decimal places years Whose investment appears to better use the company’s resources?select an optionAs an investor, you have an opportunity to make an investment in real estate costing $100,000 today. This investment would provide you with monthly cash income of $650 at the end of each month for 20 years (240 months). What is the internal rate of return (IRR)? (We take 20 years into account without selling the property, and the IRR is the annual rate of growth that your investment is expected to generate.) • Please provide both the IRR and RATE function results in an Excel file.