A machine costs $5240 and produces benefits of $1000 at the end of each year for 8 years. Assume an annual interest rate of 10%. (a) What is the payback period (in years)? (b) What is the breakeven point (in years)? (c) Since the answers in (a) and (b) are different, which one is “correct”?
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A machine costs $5240 and produces benefits of $1000 at the end of each year for 8 years. Assume an annual interest rate of 10%. (a) What is the payback period (in years)? (b) What is the breakeven point (in years)? (c) Since the answers in (a) and (b) are different, which one is “correct”?
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- Do the following present value problems. You must set up all present value problems before calculation. Merely writing down the answer (even if it is correct) is an automatic zero. You must show your work.a. Suppose we have a four year fixed-payment loan with $900 payments made at the end of each year. Given a market interest rate of 7 percent, how much was initially borrowed?b. Suppose you were considering purchasing a $6300 machine today that would generate additionalnet profit of $2500 booked at the end of each year. Assuming you need a 10 percent annual return to justify the investment, would the investment be worth doing if you had only three years of payouts? Would your answer change if you only needed a 9 percent annual return on your investment ? Why or why not? You must use present value to demonstrate your answer, and show your work.c. Consider two zero coupon bonds in which you receive $100 at the maturity date, one maturing in 3 years and one maturing in 5 years.…An investment offers $6,600 per year, with the first payment occurring one year from now. The required return is 5 percent. a. What would the value be today if the payments occurred for 10 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What would the value be today if the payments occurred for 35 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What would the value be today if the payments occurred for 65 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What would the value be today if the payments occurred forever? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)1. If you receive $176 each month for 12 months and the discount rate is 0.04, what is the future value? (show the process and can use financial calculator)
- An investment offers $3,850 per year for 15 years, with the first payment occurring one year from now. a. If the required return is 6 percent, what is the value of the investment? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What would the value be if the payments occurred for 40 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What would the value be if the payments occurred for 75 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What would the value be if the payments occurred forever? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Present value of 15 annual payments b. Present value of 40 annual payments c. Present value of 75 annual payments d. Present value of annual payments foreverConsider two investment opportunities, Investment A and Investment B. Investment A pays interest at the rate of 4% per year, compounded semi-annually. Investment B pays interest at the rate of 3.925% per year, compounded daily. Which investment provides the better return? Investment A Investment B Both provide the same return. There is not enough information provided to answer this question.Assume that at the beginning of the year, you purchase an investment for $7,200 that pays $100 annual income. Also assume the investment's value has decreased to $6,800 by the end of the year. (a) What is the rate of return for this investment? (Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.) Rate of return % (b) Is the rate of return a positive or negative number? Positive O Negative
- ou can assume that all payments are made at the beginning of the period and use "1" for the "type" argument in the formula. A. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded annually? B B. Suppose you invest $ 11,400 today. What is the future value of the investment in 29 years, if interest at 7% is compounded quarterly? 4 5 6 27 28 29 C. Suppose you invest St $ 570 monthly. What is the future value of the investment in 29 years, if interest at 5% is compounded monthly? Question 1 Question 2 + Ready Accessibility: Investigate MAR 17 A W +b) suppose that the market interest rate is 5%. Calculate the present value of the following. Show how your answer is obtained. Calculation using a formula, not using excel. i) A fixed payment loan with annual payments of $163 that matures in three years.at is the external rate of return for the investment project? Should the new computer system be recommended for purchase? 2. You borrow $280,000 at 4.00% per year and will pay off the loan in equal payments starting one year after the loan is made over a period of ten years. What are the annual end-of-year payments? Determine the amount of interest and principal that are paid each year. What is the total interest paid for the loan? 3. A distillation column is designed purchased and installed for a aoat of $a sill:
- Approximately, what is the value of (P) if F=9540, n=2 years, and i= 2.5% per year?What is the present value of an investment that pays $190 at the end of year 1, $107 at the year of year 2, and $235 at the end of year 3 if this investment earns 5% annually? your answer should be to the nearest dollar. For example, if your answer is id=mce_marker50, then input as 150.Suppose you make a charge of $1000 to a new credit card, but then charge nothing else and make the minimum payment each month. If the finance charges amount to a monthly rate of 1% and the minimum payment is 7% of the new balance, then your balance B, in dollars, after n payments is an exponential function given by the following formula. B = 1000 x a" Here the decay factor a is obtained from the finance charge and the minimum payment as shown in the following formula. a = (1 + 0.01)(1 – 0.07) (a) Find the exact value of the decay factor a. (Round your answer to three decimal places.) (b) By what percentage does your balance decrease each month? (Round your answer to one decimal place.) % (c) What will your balance be after you have made payments for 2 years? (Round your answer to two decimal places.) $ Need Help? Read It