Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales-commission selling price for the property is $450,000. You are willing to finance this transaction over a 14-year period and have toldthe buyer that you expect a 11% pretax return on the transaction. The buyer has asked you for a payment schedule under severalalternatives.Required:1. What will be your periodic cash receipt, to earn a 11% return, if payments are received from the purchaser:NOTE: to answer the above questions, use the PMT function in Excel, as follows:PMT(rate,nper, pv,fv,type)where: rate is the interest rate for the loan, nper is the total number of payments, pv is the present value (i.e., the total amount that aseries of future payments is worth now; also known as the principal), fv is the future value (or a cash balance you want to attain afterthe last payment is made; if fv is omitted, it is assumed to be 0 (zero)), and type is the number 0 (zero) or 1 and indicates whenpayments are due (if omitted, or 1 is chosen, it is assumed that payments occur at the end of each period).Additionally, what is the total of cash receipts over a 14-year period for each of the four situations?a. At the end of each week?b. At the end of each month?c. At the end of each quarter?d. At the end of each year?(Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)a. Weekly Paymentsb. Monthly Paymentsc. Quarterly Paymentsd. Annual PaymentsPeriodic CashReceiptTotal Over 14-Year Period

Time value of money is a financial concept which is used to calculate the value of money in present…

Answered: Assume that you are about to sell…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales- commission selling price for the property is $470,000. You are willing to finance this transaction over a 19-year period and have told the buyer that you expect a 9% pretax return on the transaction. The buyer has asked you for a payment schedule under several alternatives. Required: 1. What will be your periodic cash receipt, to earn a 9% return, if payments are received from the purchaser: NOTE: to answer the above questions, use the PMT function in Excel, as follows: PMT(rate,nper.pv.fv.type) where: rate is the interest rate for the loan, nper is the total number of payments, pv is the present value (ie.. the total amount that a series of future payments is worth now, also known as the principal), v is the future value (or a cash balance you want to attain after the last payment is made; if fvis omitted, it is assumed to be 0 (zero)), and type is the…
Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales-commission selling price for the property is $500,000. You are willing to finance this transaction over a 20-year period and have told the buyer that you expect a 12% pretax return on the transaction. The buyer has asked you for a payment schedule under several alternatives. Required: 1. What will be your periodic cash receipt, to earn a 12% return, if payments are received from the purchaser: NOTE: to answer the above questions, use the PMT function in Excel, as follows: PMT(rate,nper,pv,fv,type) where: rate is the interest rate for the loan, nper is the total number of payments, pv is the present value (i.e., the total amount that a series of future payments is worth now; also known as the principal), fv is the future value (or a cash balance you want to attain after the last payment is made; if fv is omitted, it is assumed to be 0 (zero)), and…
A builder is offering $139,371 loans for his properties at 9 percent for 25 years. Monthly payments are based on current market rates of 9.5 percent and are to be fully amortized over 25 years. The property would normally sell for $150,000 without any special financing. Required: a. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have Give typing answer with explanation and conclusion
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You are considering an option to purchase or rent a single residential property. You can rent it for $2,000 per month and the owner would be responsible for maintenance, property insurance, and property taxes. Alternatively, you can purchase this property for $200,000 and finance it with an 80 percent mortgage loan at 4 percent fixed-rate interest that will fully amortize over a 30-year period. The loan requires monthly payments. The loan can be prepaid at any time with no penalty. You have done research in the market area and found that (1) properties have historically appreciated at an annual rate of 2 percent per year, and rents on similar properties have also increased at 2 percent annually; (2) maintenance and insurance are currently $1,500.00 each per year and they have been increasing at a rate of 3 percent per year; (3) you are in a 24 percent marginal tax rate and plan to occupy the property as your principal residence for at least four years; (4) the capital gains exclusion…
Use a bankers year: 360 days To complete the sale of a house, the you accept a 240-day note for $9,000 at 7% simple interest. (Both interest and principal are repaid at the end of the 240 days.) Wishing to use the money sooner for the purchase of another house, the you sell the note to a third party for $9,108 after 80 days. What annual simple interest rate will the third party receive for the investment? Express your answer as a percentage.

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