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- Your organization has been asked to invest in a continuing care retirement center. Your investment will be $600,000 per year for the next 5 years. After 5 years, cash flows will be $400,000 per year for the next 15 years. If your discount rate is 10%:(a) what is the present value of the investment?(b) what is the present value of the cash flows?(c) what is the profitability index?Suppose you want to purchase equipment costing $500 and which will give you a cash flow of $35 every year. The equipment has a useful life of 7 years. Every year the equipment's price decreases by 34% and the discount rate is 4%. What is the NPV of the equipment if you purchase it now and when should you buy the equipmentYou want to save money from your businessoperation to replace a truck that has been used indelivery. The truck will be replaced after 12 yearsfrom now and the replacement cost would be about$60,000. If you earn 5% interest on your savings,how much must you deposit at the end of each yearto meet the needs?
- You are thinking about purchasing an investment from Get-Rich-Quick Investmemnt company. If you buy the investment, you will receive $50 every month for five(5)years. Payment will be made at the end of each month. If your required rate of return is 9% how much should you be willing to pay for this investment? Group of answer choices $4,632.87 $2,735.25 $2,525.10 $2,408.67It’s time to get a new laptop. The laptop is $1,800. You could put money aside for it each month for one year. If you put the money in an account that earns 4.5%, how much will you have to save each month?Your other option is to finance it over two years paying 7.1%. How much would your monthly payment be?What are the total acquisition costs of each option?Use the savings plan formula to answer the following question. You put $400 per month in an investment plan that pays an APR of 6.5%. How much money will you have after 20 years? Compare this amount to the total deposits made over the time period. After 20 years the investment plan will contain $ (Do not round until the final answer. Then round to the nearest cent as needed.)
- You want to set up a Boba Tea house and run for 4 years. For your financial analysis purpose, you estimate an initial investment and an annual free cash flow. Your initial investment will be 0. Your annual free cash flow from operation will be $30,000 (at the end of each year) for the next 4 years. What is a value of the Boba Tea house (present value calculation)? Here we assume a discount rate is 8%.How much money will the Halls have to set aside each month so as to have enough saved up for a down payment on the $195,000 house within 3 years, if the savings can grow at 0.8%? Assume that the closing costs amount to 1.8% of the loan and the down payment is 20% of the house price. The halls also plan to use half of their savings balance toward the down payment. Price of House at today's dollar: Inflation: House price at the time of purchase: Down Pay: Down Payment: Closing Costs: Total Money needed for Down Payment and Closing Cost: Annual Rate of return on investments: Number of months until purchase of house: Deposits required to accumulate the down pmt and closing costs:Use the savings plan formula to answer the following question. You put $300 per month in an investment plan that pays an APR of 4.5%. How much money will you have after 28 years? Compare this amount to the total deposits made over the time period. After 28 years the investment plan will contain S (Do not round until the final answer. Then round to the nearest cent as needed.) The total deposits made over the time period is $ (Type a whole number.)
- You can purchase an equipment for $4,000. The equipment will provide benefits worth $900 a year. The expected life of the equipment is 8 years. It is expected that the price of the equipment will decrease by 15% per year. If the discount rate is 12%, would you buy the equipment today or will wait to purchase? When is the best time to purchase it?You are considering a safe investment opportunity that requires a $1,080 investment today, and will pay $710 two years from now and another $610 five years from now. a. What is the IRR of this investment? b. If you are choosing between this investment and putting your money in a safe bank account that pays an EAR of 5% per year for any horizon, can you make the decision by simply comparing this EAR with the IRR of the investment? Explain. a. What is the IRR of this investment? The IRR of this investment is _____________%. (Round to two decimal places.)The price of a car you want is $42,000 today. Its price is expected to increase by $1000 each year. You now have $25,000 in an investment account, which is earning 10% per year. How many years will it be before you have enough to buy the car without borrowing any money? Solve by (a) trial and error, and (b) by spreadsheet.