You have been offered a contract from Comp Co. You will receive $120,000 up front from Comp Co. In exchange, you will provide $50,000 in services each year for 3 years. Your cost of capital is 10%. Find the NPV and IRR of the deal. Should you accept the contract? Explain.
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- Your employer will give you a raise in an annual salary of $10,000 if you pass a Professional Engineering exam. Assume that you can work for the company for n years. Use the discount rate (r) of 8% per year. a. What is PV of the raise for n = 35? b. What is AE of the raise? c. Redo part a for n = ∞.You are assiting a newly hired employee. You begin explaning the process of utilizing excel to finance properties. Consider the following. A realator has a house on sale for $640,000. If possible you believe you can finance the home for $300,000 for 20 years at a 3% interest rate. What would the monthly principle and interest payment be for the acquird loan? Calculate using the PV funtion in excel. How would you caluclate this in Excel using the PV function? Rate: Nper: Pmt: FV: Type: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 told the buyer that you expect a 11% 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 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 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 type is…
- You are offered a 3 year investment opportunity that requires investing USD 1,505 today. The investment will pay you an income of USD 66 in year 1. USD 76 in year 2 and USD 73 in year 3. At the end of year 3, it will also pay a total sum of USD 2,227. THE current discount rate is 0.13 percent. Is the investment worth undertaking? Give your answer in 0.000.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…An investment offers to pay you $10,000 a year for four years. If it costs $27,980, what will be your rate of return on the investment? Use Appendix D to answer the question. Round your answer to the nearest whole number.
- A real estate investor holds a time-payment investment contract on his shares in a piece of land. The contract calls for the payment of $1,400 at the end of each month for a six-year period. The first payment is due in one month. The investor offers to sell you the contract for $68,000 cash today. If you can otherwise make 1% per month on your money, would you accept or reject the investor's offer? Select one: a. No, you will pay $112.6 extra per month b. Yes, you will pay $556.22 less per month C. No, you will pay $85.37 more per month d. Yes, you will pay $70.58 less per month e. Can not take a decisionYou expect to receive $150,000 per year on a contract that will last 5 years. You are trying to compare this offer to a lump sum payment. If you can earn 5% on your investments, how much is the contract worth to you today?Suppose that you are offered a job for three years, with the following three possible payment options, from which you can choose (all other conditions are equal): Option 1: You are offered $500 for the first month, and each month after you’ll receive an additional amount that increases $50 a month. That is, you’ll receive $500 + $50 = $550 for the second month, and $550 + 100 = $650 for the third month, and $650 + $150 = $800 for the fourth month, etc. Option 2: You are offered $1000 for the first month, and $100 additional dollars each month after. That is, you’ll receive $1100 for the second month, $1200 for the third month, etc. Option 3: You are offered one cent for the first month, and your payment will be doubled each month. That is, you’ll receive 2 cents for the second month, 4 cents for third month, 8 cents for the fourth month, and 16 cents for the fifth month, etc. Construct a table for monthly payments for three years for each of the three options. Make a…
- A company is proposing to issue a 5-year debenture of Rs.1000 redeemable in equal instalments at 14% rate of interest per annum. If an investor has a minimum required rate of return of 12%, calculate the debentures present value for him. What should he be willing to pay now to purchase the debenture?You have kust been offered a contract worth $1.16millon per year for 6 yean. Howeves, to take the contract, you will need to purchase some new equipment. Your discount rate for this peoject is 12.1X You are still negoliating the purchase price of the equipment. What is the nost you can pay for the equipment and still have a positive NPV? The mot you can pary for the equpment and actiove the12.1%annuar return is $ million. (Round so two decimal places)You have been hired as a financial advisor to Michael Jordan. He has received two offers forplaying professional basketball and wants to select the best offer, based on considerations ofmoney only. Offer A is a $10m offer for $2m a year for 5 years. Offer B is a $11m offer of $1ma year for four years and $7m in year 5. What is your advice? (Hint: compare the present value ofeach contract by assuming a range of interest rate, say 8% - 14%)