10. The Right Brothers are considering the purchase of a bakery from James Bond. The Right Brothers anticipate that the bakery will generate cash flows of $76,000 per year for 20 years. At the end of 20 years, they intend to sell the

A borrower looking to borrow $100,000 can obtain an 80 percent loan with an 8 percent interest rate and monthly payments. The loan is to be fully amortized over 25 years. Alternatively, he could obtain a 90 percent loan at an 10 percent rate with the same loan term. What is the incremental ANNUAL cost of borrowing the additional funds? 20.13 17.42 23.98 18.19

Future value. A speculator has purchased land along the southern Oregon coast He has taken a loan with the end-of-year payments of $8.000 for 10 years. The loan rate is 5%. Asthe end of 10 years, he believes that he can sell the land for $90,000. If he is correct on the future price, did he make a wise investment? What is the future value of the loan 10 years from now? (Round to the nearest cent.).

The Mendez family is considering a mortgage loan of $350,000 at an annual interest rate of 6.55%. (a) How much greater is their mortgage payment if the term is 20 years rather than 30 years?(b) How much less is the amount of interest paid over the life of the 20-year loan than over the life of the 30-year loan?

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?

Suppose that you invest $50,000 into a downpayment on a $250,000 house, which has a price appreciation of 3% per year. Your mortgage is fixed at $ 36,000 per year, and your tenants pay you $24,000 per year. Property taxes, maintenance, and other expenses cost $5,000 per year. Suppose that after 25 years, you sell your property. Would it have been better to invest $ 50,000 in the stock market, assuming it has returns of 9% per year over the same time period (25 years)? Why? Show your calculations and justify your answer. For the purposes of this question, suppose that inflation is zero.

2. The Electric Company is considering the purchase of a hillside ranch for possible use as a windmill farm sometime in the future. The owner of the 800-acre ranch will sell $4000 per acre if the company will pay her in two payments - one payment now and another that is twice as large 4 years from now. If the transaction interest is 12% per year, what is the amount of the first payment?

The Claussens are considering the purchase of a hardware store. The Claussens anticipate that the store will generate cash flows of $83,000 per year for 20 years. At the end of 20 years, they intend to sell the store for an estimated $530,000. The Claussens will finance the investment with a variable rate mortgage. Interest rates will increase twice during the 20-year life of the mortgage. Accordingly, the Claussens' desired rate of return on this investment varies as follows: Years 1-5 Years 6-10 Years 11-20 Required: 8% 10% 12% What is the maximum amount the Claussens should pay for the hardware store? (Assume that all cash flows occur at the end of the year.) Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) PV of $83,000 cash flow PV of $530,000 selling price Maximum paid for store Years 1-5 Years 6-10 $ 331,395…