Ben and Carla Covington plan to buy a condominium. They will obtain a $224,000, 30-year mortgage at 7.0 percent. Their annual property taxes are expected to be $2,000. Property insurance is $520 a year, and the condo association fee is $240 a month. Based on these items, determine the total monthly housing payment for the Covingtons. Use Exhibit 7-7.
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Ben and Carla Covington plan to buy a condominium. They will obtain a $224,000, 30-year mortgage at 7.0 percent. Their annual property taxes are expected to be $2,000. Property insurance is $520 a year, and the condo association fee is $240 a month. Based on these items, determine the total monthly housing payment for the Covingtons. Use Exhibit 7-7. (Round your intermediate calculations and final answer to 2 decimal places.)
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- Grove Media plans to acquire production equipment for $845,000 that will be depreciated for tax purposes as follows: year 1, $329,000; year 2, $189,000; and in each of years 3 through 5, $109,000 per year. A 10 percent discount rate is appropriate for this asset, and the company's tax rate is 20 percent. Use Exhibit A.8 and Exhibit A.9. Required: a. Compute the present value of the tax shield resulting from depreciation. b. Compute the present value of the tax shield from depreciation assuming straight-line depreciation ($169,000 per year). Complete this question by entering your answers in the tabs below. Required A Required B Compute the present value of the tax shield resulting from depreciation. Note: Round PV factor to 3 decimal places. Present value of the tax shieldPresent value of an ordinary annuity. Fill in the missing present values in the following table for an ordinary annuity:The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $490,000. The estimated net cash flows from each project are as follows: Year 1 1 2 3 4 2 Year 5 6 3 7 8 9 10 4 The committee has selected a rate of 12% for purposes of net present value analysis. It also estimates that the residual value at the end of each project's useful life is $0, but at the end of the fourth year, the office expansion's residual value would be $180,000. 5 6 0.943 0.890 0.840 Present Value of $1 at Compound Interest 6% 10% 0.792 0.747 0.705 0.665 0.627 Net Cash Flows Office Expansion $125,000 125,000 125,000 125,000 125,000 125,000 0.592 0.558 0.909 0.826 0.751 0.683 0.621 0.564 0.513 Net Cash Flows Servers 0.467 $165,000 165,000 165,000 165,000 0.424 0.386 12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 15% 0.870 0.756 0.658 0.572 0.497 0.432…
- The investment committee of Sentry Insurance Co. is evaluating two projects, office expansion and upgrade to computer servers. The projects have different useful lives, but each requires an investment of $490,000. The estimated net cash flows from each project are as follows: Year 1 2 Year 3 4 5 The committee has selected a rate of 12% for purposes of net present value analysis. It also estimates that the residual value at the end of each project's useful life is $0, but at the end of the fourth year, the office expansion's residual value would be $180,000. 6 7 8 9 10 1 1 2 3 2 4 5 6 3 0.943 0.890 0.840 Present Value of $1 at Compound Interest 6% 10% 12% 0.792 0.747 0.705 0.665 0.627 0.592 0.558 Net Cash Flows Office Expansion $125,000 125,000 125,000 125,000 125,000 125,000 0.943 1.833 2.673 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 Net Cash Flows Servers $165,000 165,000 165,000 165,000 0.909 1.736 2.487 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322…Use the following 8% interest factors 7 periods 8 periods 9 periods Select one: Present Value of Ordinary Annuity. a. $319,099 b. $267,687 C. $226,800 d. $172,398 5.2064 5.7466 6.2469 What will be the balance on September 1, 2029 in a fund which is accumulated by making $30,000 annual deposits each September 1 beginning in 2022, with the last deposit being made on September 1, 2027? The fund pays interest at 8% compounded annually. Future Value of Ordinary Annuity. 8.92280 10.63663 12.48756ST Unit 8 Quest (11U) + pQLSf8ziezOsWz6j9T7OGVQSHI-6ls9bQrlQevfkKxle-RtQ3Rlg/formResponse Question 6: How much was the amount of the original loan? Regular Payment Rate of Compound Interest per Year Compounding Period semi-annual $1575 every 6 months 5.4% $8445.09 $17076.01 a. b. $14 444.94 $24 143.61 a b C. d. Time 6 years
- Net present value-unequal lives Project 1 requires an original investment of $50,100. The project will yield cash flows of $10,000 per year for 8 years. Project 2 has a computed net present value of $11,600 over a 6-year life. Project 1 could be sold at the end of 6 years for a price of $38,000. Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below. Present Value of $1 at Compound Interest 6% 10% Year 1 2 3 4 5 6 7 8 9 10 1 2 3 4 5 6 0.943 0.890 0.840 0.792 0.747 7 0.705 0.665 0.627 0.592 0.558 0.943 1.833 2.673 3.465 4.212 4.917 0.909 5.582 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.909 1.736 2.487 3.170 3.791 4.355 12% 4.868 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 0.893 1.690 2.402 3.037 3.605 4.111 15% 4.564 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.870 1.626 2.283 2.855 3.353…What semiannual sinking fund payment would be required to yield $45,000 nine years from now? The annual interest rate is 6% compounded semiannually. Click the icon to view the table. The sinking fund payment is S (Round to the nearest cent as needed.)Payment $ 123 4,555 74,484 167,332 Years 13 8 5 9 Interest Rate (Annual) 13 % 8 10 1 Future Value (Payment made on last day of period) Future Value (Payment made on first day of period)
- Internal Rate of Return Method The internal rate of return method is used by King Bros. Construction Co. in analyzing a capital expenditure proposal that involves an investment of $110,610 and annual net cash flows of $18,000 for each of the 10 years of its useful life. Present Value of an Annuity of $1 at Compound Interest 6% Year 10% 12% 15% 20% 0.943 0.909 0.893 0.870 0.833 1.626 1.528 1.833 1.736 1.690 2.402 2.283 2.673 2.487 2.106 3.170 3.465 3.037 2.855 2.589 2.991 4.212 3.791 3.605 3.352 4.111 4.917 4.355 3.784 3.326 5.582 4.868 4.564 4.160 3.605 4.487 3.837 6.210 5.335 4.968 6.802 5.759 5.328 4.772 4.031 5.650 10 7.360 6.145 5.019 4.192 a. Determine a present value factor for an annuity of $1 which can be used in determining the internal rate of return. If required, round ecimal places. your answer to threeNet Present Value Method for a Service Company Opulence Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships, the Bellwether, can hold up to 3,200 passengers and it can cost $640 million to build. Assume the following additional information: There will be 300 cruise days per year operated at a full capacity of 3,200 passengers. • The variable expenses per passenger are estimated to be $95 per cruise day. The revenue per passenger is expected to be $475 per cruise day. The fixed expenses for running the ship, other than depreciation, are estimated to be $94,848,000 per year. • The ship has a service life of 10 years, with a residual value of $100,000,000 at the end of 10 years. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7…Net Present Value-Unequal Lives Project 1 requires an original investment of $88,600. The project will yield cash flows of $17,000 per year for six years. Project 2 has a calculated net present value of $23,200 over a four-year life. Project 1 could be sold at the end of four years for a price of $69,000. Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below. Present Value of $1 at Compound Interest 12% Year 6% 10% 15% 20% 0.909 1 0.943 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 0.712 3 0.840 0.751 0.658 0.579 0.792 0.683 0.636 0.572 4 0.482 0.621 5 0.747 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 0.424 0.592 0.361 0.284 0.194 0.247 10 0.558 0.386 0.322 0.162