15. An investment has an NOI of $40,000. There is market rate mortgage financing available for 75% of the value at 7.5% interest per year with monthly payments, an amortization over 20 years, and an equity dividend rate (Re) of 9.5%. What, is the value rounded to the nearest $100,000? Use the band-of- investment technique.

15. An investment has an NOI of $40,000. There is market rate mortgage financing available for 75% of the value at 7.5% interest per year with monthly payments, an amortization over 20 years, and an equity dividend rate (Re) of 9.5%. What, is the value rounded to the nearest $100,000? Use the band-of- investment technique.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Please show working Please answer a , b and c a. An investment will pay $50 at the end of each of the next 3 years, $200 at the end of Year 4, $350 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 9% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent. Present value: $ __________ Future value: $ ___________ b. Your parents will retire in 20 years. They currently have $340,000 saved, and they think they will need $1,250,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? Round your answer to two decimal places. ___________ % c. If you deposit $2,000 in a bank account that pays 8% interest annually, how much will be in your account after 5 years? Do not round intermediate calculations. Round your answer to the nearest cent.
You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial payment of $24,900 at the end of this year and subsequent payments that will grow at a rate of 2.9 percent annually. If you use a 9 percent discount rate for investments like this, what is the present value of this growing perpetuity? (Round answer to 2 decimal places, e.g. 15.25.) Present value $ ?
You invest $9000 in an account that pays simple interest of 2% for 13 years. What is the interest you will have at the end of the indicated period?
An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $600 at the end of Year 6. A. If other investments of equal risk earn 4% annually, what is its present value? Round your answer to the nearest cent. B. If other investments of equal risk earn 4% annually, what is its future value? Round your answer to the nearest cent.
Consider an investment which pays $3,000 at the end of year 1, year 2, and year 3. In year4, the investment will pay $4,000 and this payment will grow by 2% each year forever. If theappropriate interest rate is 9%, what is this investment worth today? (Show Using BA II Plus or By Hand)
nt Use the compound interest formulas A = P and A = Pert to solve the problem given. Round answers to the nearest cent. Find the accumulated value of an investment of $20,000 for 7 years at an interest rate of 4.5% if the money is a. compounded semiannually; b. compounded quarterly; c. compounded monthly; d. compounded continuously. a. What is the accumulated value if the money is compounded semiannually? (Round your answer to the nearest cent. Do not include the $ symbol in your answer.) b.What is the accumulated value if the money is compounded quarterly? (Round your answer to the nearest cent. Do not include the $ symbol in your answer.) c. What is the accumulated value if the money is compounded monthly? (Round your answer to the nearest cent. Do not include the $ symbol in your answer.) d. What is the accumulated value if the money is compounded continuously? (Round your answer to the nearest cent. Do not include the $ symbol in your answer.)
14. In a discount interest loan, you pay the interest payment up front. For example, if a 1-year loan is stated as $10,000 and the interest rate is 10%, the borrower "pays" .10 × $10,000 = $1,000 immediately, thereby receiving net funds of $9,000 and repaying $10,000 in a year. a. What is the effective interest rate on this loan? (Round your answer to 2 decimal places.) b. If you call the discount d (for example, d = 10% using our numbers), express the effective annual rate on the loan as a function of d. c. Is the effective annual rate always greater than the stated rate d?
An investment promises to pay $7,000 at the end of each year for the next six years and $3,000 at the end of each year for years 7 through 10. Use Table II and Table IV or a financial calculator to answer the questions. Round your answers to the nearest cent. If you require a 15 percent rate of return on an investment of this sort, what is the maximum amount you would pay for this investment?$ Assuming that the payments are received at the beginning of each year, what is the maximum amount you would pay for this investment, given a 15 percent required rate of return?$
Assume you have the following asset and liability in your Balance Sheet: Asset - Bond A Modified Duration = 2.6 years Value = RM1.5 million Liability - Bond B Modified Duration = 3.1 years Value = RM1.0 million a. Calculate the duration gap. b. What is the expected change in Net Worth if interest increases by 1%? Assume previous interest is 10% c. What should or could you to achieve immunised balance sheet? Note: Please show all workings.
Assume a selling price of $88,000, a down payment of $24,000, and a mortgage at 13% for 30 years. If the loan was for 25 years, what would be the difference in the total interest cost of the loan? (Round your answer to the nearest cent.)
You are evaluating a growing perpetuity investment from a large financial services firm. The investment promises an initial payment of $15,000 at the end of this year and subsequent payments that will grow at a rate of 2.0 percent annually. If you use a 9 percent discount rate for investments like this, what is the present value of this growing perpetuity? (Round answer to 2 decimal places, e.g. 15.25.) Present value $
A property has a FMV of $7,500,000. If the property owner can only secure a loan with an LTV of 70%, a loan amortization of 30 years, and an interest rate of 8.125%, then a) What is the monthly payment for this loan? and b) What is the outstanding balance on the loan after eight years?

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