debt principal is reduced to 50% of the original principal, what is the internal rate of return (IRR) of this investment? Multiple Choice 5.71% 12.50% 16.99% 40.00% 25.85%
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- An LBO purchases a business for $250,000,000, 80% of which is debt. In 7 years, the LBO sells it for $350,000,000. If the debt principal is reduced to 50% of the original principal, what is the internal rate of return (IRR) of this investment? Multiple Choice 5.71% 12.50% 16.99% 40.00% 25.85%What is the simple payback period (in years) for an investment of $465,000 if the net annual income is $75,000? O a.7 O b.8 O c. 5 O d. 9 O e. 6If a $10,000 investment earns a 4.3 percent annual return, what should its value be after 1 year? Multiple Choice $4,300 $10,430 $4,400 $10,043 ○ $10,000
- Two investments have the following pattern of expected returns: Investment A Year 1 Year 2 Year 3 Year 4 Year 4 (Sale) BTCF $5,000 $10,000 $12,000 $15,000 $120,000 Investment B Year 1 Year 2 Year 3 Year 4 Year 4 (Sale) BTCF $2,000 $4,000 $1,000 $5,000 $180,000 Investment A requires an outlay of $110,000 and Investment B requires an outlay of $120,000. Required: a. What is the BTIRR on each investment? b. If the BTIRR were partitioned based on BTCFo and BTCFs' what proportions of the BTIRR would be represented by each? c. Which investment would be preferable?8. Assuming you require a 15% rate of return, what will the net present value be? Initial Investment 3 4 6 Year Cash Flow 9 700 1 530 1600 4 150 5 550 2 080 before tax Cash Flow 7 000 1 100 1 200 3 000 4 000 1 500 after tax A) R-358.57 B) R-223.68 C) R-130.78 D) R-228.05 9. A loan of R1.75 million was made to a farmer, bonded against fixed property at an interest rate of 7.25% per year compounded quarterly. The farmer agreed to pay off the loan in equal quarterly instalments over a period of 15 years. What are the equal quarterly payments the farmer needs to make? A) R29 167 B) R48 085 C) R134 292 D) None of the above 10.A loan of R1.75 million was made to a farmer, bonded against fixed property at an interest rate of 7.25% per year compounded quarterly. The farmer agreed to pay off the loan in equal quarterly instalments over a period of 15 years. What is the remaining capital the farmer still needs to pay at the end of the fourth year? A) R1 682 735 B) R1 610 459 C) R1 449 353 D)…The down payment or equity needed for this investment is $60,000 (outflow) Cash Flow $15,000 5,000 -4,000 8,000 Sale 4 $65,000 Calculate the adjustment rate to use for MIRR: N 1 2 3 4 Savings Rate is: 1.5% and Loan Rate is 8%
- An investment of $74,000 yields a net annual income of $22,000 for 6 years. What is the internal rate of return (IRR) for this investment? O a. 19.54% O b. 24.43% O c. 13.03% O d. 29.31% O e. 15.63%An investment will pay $600 at the end of each of the next 2 years, $700 at the end of Year 3, and $1,000 at the end of Year 4. What is its present value if other investments of equal risk earn 6 percent annually? a. $1,821.82 b. $1,913.83 c. $2,297.07 d. $2,479.86 e. $2,735.85An investment pays $200 at the end of Year I. $250 at the beginning* of Year 2. $387 at the end of Year 4. and $500 at the beginning of Year 6. If other investments of equal Mk earn 7.5% annually. what will be this investments present value and future value?
- A business is planning to purchase a piece of equipment that will produce a continuous stream of income for 8 years with rate of flow f(t) = 9,000. If the continuous income stream earns 6.65%, compounded continuously, what single deposit into an account earning the same interest rate wi produce the same future value as the continuous income stream? (This deposit is called the present value of the continuous income stream.) What is the future value of the investment? $ (Round to the nearest dollar as needed.) What is the present value of the investment? (Round to the nearest dollar as needed.)Zetterberg Builders is given two options for making payments on a brush hog. Find the value of X such that they would be indifferent between the two cash flow profiles if their TVOM is 5% per year compounded yearly. End of Year Series 1 Series 2 0 1 2 3 4 5 Value of X: $ $250 $0 $300 $0 $350 $35X $400 $25X $15X $5X $0 $0Two investments have the following pattern of expected returns: Investment A Year 1 Year 2 Year 3 Year 4 Year 4 (Sale) BTCF $6,300 $11,300 $13,300 $16,300 $133,000 Investment B Year 4 Year 1 Year 2 Year 3 Year 4 (Sale) BTCF $3,300 $5,300 $2,300 $6,300 $193,000 Investment A requires an outlay of $123,000 and Investment B requires an outlay of $133,000. Required: a. What is the BTIRR on each investment? b. If the BTIRR were partitioned based on BTCFO and BTCFS what proportions of the BTIRR would be represented by each? c. Which investment would be preferable? Complete this question by entering your answers in the tabs below. Required Required Required A B C What is the BTIRR on each investment? (Round your answers to 2 decimal places.) Investment Investment A B BTIRR % %