FIOWS + 0 1 2 3 $350,000 $357,000 $364,140 $371 123 ale Pl

Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
ChapterM: Time Value Of Money Module
Section: Chapter Questions
Problem 19P: Asset Purchase Price BWP Inc. is considering the purchase of an asset. BWPs required rate of return...
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An investor is considering purchasing a sale-leaseback with the following 10-year cash flows:
ΕΟΥΙ
Cash Flows
+
0
1
$350,000
2
$357,000
3
$364,140
4
$371,423
5
$378,851
6
$386,428
7
$394,157
8
$402,040
9
$410,081
10
$418,282
+
Sale Proceeds
$5,333,000
If the seller/lessee in the previous question insists on a purchase price of $5,000,000 today,
what would the investor's yield be?
9.56 percent
7.66 percent
8.22 percent
8.03 percent
Transcribed Image Text:An investor is considering purchasing a sale-leaseback with the following 10-year cash flows: ΕΟΥΙ Cash Flows + 0 1 $350,000 2 $357,000 3 $364,140 4 $371,423 5 $378,851 6 $386,428 7 $394,157 8 $402,040 9 $410,081 10 $418,282 + Sale Proceeds $5,333,000 If the seller/lessee in the previous question insists on a purchase price of $5,000,000 today, what would the investor's yield be? 9.56 percent 7.66 percent 8.22 percent 8.03 percent
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