Danny creates up an investment arrangement for friend that will return $5000 the first year, $6125 the second year, $7250 the third year, and so on, for 30 years.State appropriate formulae and determine, how much will the investment yield altogether?
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Danny creates up an investment arrangement for friend that will return $5000 the first year,
$6125 the second year, $7250 the third year, and so on, for 30 years.State appropriate formulae
and determine, how much will the investment yield altogether?
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- Your friend has a trust fund that will pay her the following amounts at the given interest rate for the given number of years. Calculate the current (present) value of your friends trust fund payments. For further instructions on future value in Excel, see Appendix C.John has an investment opportunity that promises to pay him $16,000 in four years. Suppose the opportunity requires John to invest $13,200 today. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) What is the interest rate John would earn on this investment? (Round your interest rate to the nearest whole percentage.) Solve for i Present Value: n = i = Future Value:jacob has an opportunity to invest in a new retail development in his building. The initial investment is $53,000 and the expected annual cashflows thereafter are {$2,400; $4,000; $4,000; $7,500; $11,000; $11,000; $14,000; $14,000}. What is Jacob's IRR on this investment? (Allow two decimals in the percentage but do not enter the % sign.)
- A local entreprenuer asks you to invest $10,000 in a business venture. Based on your estimate, you would receive nothing for three years at the end of the four you would receive $4900, and at the end of year five you would receive $14500. If you estimates are correct, what would be the IRR on this investmenet?(Use Calulator or Formula Approach) You are offered an investment that will pay you $200 in one year, $400 the next year, $600 the next year and $800 at the end of the fourth year. You can earn 12 percent on very similar investments. What is the most you should pay for this one?An investment promises to pay $6,000 at the end of each year for the next three years and $4,000 at the end of each year for years 4 through 7. Use Table II and Table IV or a financial calculator to answer the questions. Round your answers to the nearest cent. If you require a 11 percent rate of return on an investment of this sort, what is the maximum amount you would pay for this investment?$ 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 11 percent required rate of return?$
- Cromwell is acquiring some land for $1,200,000 in exchange for semiannual payments of $75,000 at an interest rate of 6.35 percent. How many years will it take Cromwell to pay for this purchase? Can the excel solution be provided?Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,440 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,110 plus an additional investment at the end of the second year of $5,550. What is the NPV of this opportunity if the interest rate is 1.5% per year? What is the NPV of this opportunity if the interest rate is 1.5% per year? The NPV of this opportunity is $_______ (Round to the nearest cent)Bob has the option of undertaking one of two investment projects, each of which requires an initial investment outlay of $2,500. Payouts to each project are realized at the end of years 1, 2 and 3, and are shown in the table below. Year 1 Year 2 Year 3 Project 1 Project 2 1,000 600 1,000 1,000 1,000 1,475 a. Bob can finance either of these investments at a rate of 2% per annum. Is either of the investments profitable? If so, which project will he undertake? Explain. b. The rate of interest rises to 10%. How does this affect Bob's choice? Explain. c. Generally speaking, how does an increase in interest rates affect the desirability of undertaking projects whose returns are enjoyed much further into the future? Explain.
- Each of the following situations is independent. Work out your own solution to each situation, and thencheck it against the solution provided.1. John plans to retire in 12 years. Upon retiring, he would like to take an extended vacation, which heexpects will cost at least $40,000. What lump-sum amount must he invest now to have $40,000 at theend of 12 years if the rate of return is:a. Eight percent?b. Twelve percent?Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $5,640 at the end of each of the next 3 years. The opportunity requires an initial investment of $1,410 plus an additional investment at the end of the second year of $7,050. What is the NPV of this opportunity if the interest rate is 1.9% per year? Should Marian take it? What is the NPV of this opportunity if the interest rate is 1.9% per year? The NPV of this opportunity is $ (Round to the nearest cent.)An investor is considering an investment that will pay $2,170 at the end of each year for the next 10 years. He expects to earn a return of 12 percent on his investment, compounded annually. Required: a. How much should he pay today for the investment? b. How much should he pay if the investment returns are received at the beginning of each year? (For all requirements, do not round intermediate calculations and round your final answers to the nearest whole dollar amount.) a. Present value of ordinary annuity b. Present value of annuity due