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You own a building that is expected to pay annual cash flows forever. If the building is worth $2000000, the cost of capital is 5.0%, and annual cash flows are expected with the first one due in one year and all subsequent ones growing annually by 2.2%, then what is the amount of the cash flow produced by the building in 3 years expected to be?(Round the value to 0th decimal to get a whole number)
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- Falkland, Inc., is considering the purchase of a patent that has a cost of $50,000 and an estimated revenue producing life of 4 years. Falkland has a cost of capital of 8%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?Mason, Inc., is considering the purchase of a patent that has a cost of $85000 and an estimated revenue producing lite of 4 years. Mason has a required rate of return that is 12% and a cost of capital of 11%. The patent is expected to generate the following amounts of annual income and cash flows: A. What is the NPV of the investment? B. What happens if the required rate of return increases?Your company is planning to purchase a new log splitter for is lawn and garden business. The new splitter has an initial investment of $180,000. It is expected to generate $25,000 of annual cash flows, provide incremental cash revenues of $150,000, and incur incremental cash expenses of $100,000 annually. What is the payback period and accounting rate of return (ARR)?
- Consider a project in which you have to invest $15,000 today and you will receive $24847 in one year. What is the internal rate of return (IRR) of this project? The IRR is % (Keep 2 decimal places). Answer:Your company is planning to purchase a new log splitter for its lawn and garden business. The new splitter has an initial investment of $204,000. It is expected to generate $30,000 of annual cash flows, provide incremental cash revenues of $125,080, and incur incremental cash expenses of $70,000 annually. What is the payback period and accounting rate of return (ARR)? Round your answers to 1 decimal place. Payback period fill in the blank 1 years ARR fill in the blank 2%Norwood Investments is putting out a new product. The product will pay out $25,000 in the first year, and after that the payouts will grow by an annual rate of 2.5 percent forever. If you can invest the cash flows at 7.5 percent, how much will you be willing to pay for this perpetuity (round to the nearest dollar)?
- You own building U and building M. The next cash flow for each building is expected in 1 year. Building U has a cost of capital of 13.60 percent and is expected to produce annual cash flows of $141,820.00 forever. Building M is worth $5,359,454.00 and is expected to produce annual cash flows of $423,016.00 forever. Which assertion is true? O Building M is more valuable than building U and building U is more risky than building M O Building U is more valuable than building M and building U is more risky than building M O Building M is more valuable than building U and building M is more risky than building U O Building U is more valuable than building M and building M is more risky than building U O Building U and building M either have the same value, the same level of risk, or both the same value and level of risk.You own building V and building S. The next cash flow for each building is expected in 1 year. Building V has a cost of capital of 17.20 percent and is expected to produce annual cash flows of $369,045.00 forever. Building S is worth $6,214,435.00 and is expected to produce annual cash flows of $169,044.00 forever. Which assertion is true? O Building V is more valuable than building S and building V is more risky than building S Building S is more valuable than building V and building S is more risky than building V O Building V is more valuable than building S and building S is more risky than building V O Building S is more valuable than building V and building V is more risky than building S Building V and building S either have the same value, the same level of risk, or both the same value and level of risk. لاYou own building P and building X. The next cash flow for each building is expected in 1 year. Building P has a cost of capital of 8.20 percent and is expected to produce annual cash flows of $470,328.00 forever. Building X is worth $5,082,013.00 and is expected to produce annual cash flows of $124,252.00 forever. Which assertion is true? O Building P is more valuable than building X and building P is more risky than building X O Building P is more valuable than building X and building X is more risky than building P O Building X is more valuable than building P and building P is more risky than building X O Building X is more valuable than building P and building X is more risky than building P O Building P and building X either have the same value, the same level of risk, or both the same value and level of risk.
- A real estate property is on the market. You have estimated it will give you net cash flows of $5353 per month. You hope to sell it in 7 years for $334380. Your required return is 9.24%, how much should you be willing to pay for the property today? Answer:Company ABC invests in a long-term project that will start generating cash flows 10 years from now (and will then continue generating cash flows forever). The first cash flow is going to be equal to $22 million. Cash flows will then grow 2% per year forever. If the project costs $460 million today, is it a good investment if interest rates are (and are going to be forever) equal to 5%?You buy a new piece of equipment for $11,778, and receive a cash inflow of $2,000 per year for 10 years. What is the internal rate of return?
