Gordon has a goal of purchasing a new second hand car valued at approximately $14,000 financed from the returns generated on his investments over the next 12 months. He currently has approximately $150,000 available for investment and wishes to select any one of the following alternative investments in order to realise his goal: Expected Income return (% p.a.) Details 1 year unsecured bank note 10 1 bedroom rental property 4 Shares in Australian bank 3 Expected Capital return (% p.a.) 0 8 12 Ignore the effects of taxation in your calculations. (a) Calculate the expected amount of income and capital generated by each investment over the next 12 months (b) Rank the investments in the order of their total return (expressed as a dollar amount) from the highest to the lowest

Gordon has a goal of purchasing a new second hand car valued at approximately $14,000 financed from the returns generated on his investments over the next 12 months. He currently has approximately $150,000 available for investment and wishes to select any one of the following alternative investments in order to realise his goal: Expected Income return (% p.a.) Details 1 year unsecured bank note 10 1 bedroom rental property 4 Shares in Australian bank 3 Expected Capital return (% p.a.) 0 8 12 Ignore the effects of taxation in your calculations. (a) Calculate the expected amount of income and capital generated by each investment over the next 12 months (b) Rank the investments in the order of their total return (expressed as a dollar amount) from the highest to the lowest

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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sanja
In 25 years, you are hoping to have saved $120 000 towards your child’s university education. If you are able to save $3000 at the end of each year for the next 25 years, what rate of return must you earn on your investments in order to achieve your goal? a. 5% b. 6% c. None of answers given d. 4%
Ashvini
Akeem Joffer hopes to a new cabin on Webb Lake in Maine. Akeem has $13,000 saved today and wants to save $7,000 every year for the next nine years. Assume Akeem can earn 11% on his investments. Compute the amount Akeem expects to have available to purchase the cabin in 9 years. 5. Reggie Hammond has $300,000 in cash located in a suitcase in the trunk of his car.Reggie deposits this amount in Gibraltar Bank. The bank offers a 6.7% annual rate and pays interest quarterly. Reggie hopes to have $1,600,000 at the end of five years. Compute the quarterly savings Reggie must deposit into this account in order to achieve his goal. 6. Billy Ray Valentine promises to pay his friend Louis Winthorpe a deferred annuity of $60,000 beginning in year five and continuing through year eleven plus a three-year deferred annuity of $7,000 that begins in year 15. Interest rate is 8.2 % . Compute the amount Billy Ray needs today to fulfill his obligation to his friend
Blossom Googal owns a garage and is contemplating purchasing a tire retreading machine for $32.820. After estimating costs and revenues, Blossom projects a net cash inflow from the retreading machine of $4,700 annually for 11 years. Blossom hopes to earn a return of 8% on such investments. Click here to view the factor table. (For calculation purposes, use 5 decimal places as displayed in the factor table provided.) What is the present value of the retreading operation? (Round answer to 2 decimal places, eg. 25.25) Present value 2$ Should Blossom Googal purchase the retreading machine?
ames is starting to take his financial future seriously after studying finance at university. He is currently 25 years of age and wishes to retire from full-time work at the age of 55 with $2 000 000 in savings. b) How much will James need to contribute at the start of each month in order to receive $2 000 000 in 30 years’ time at a compound interest rate of 7.25% p.a.? Show formula, variables, calculation and a concluding statement in your response.
Mr. New Retiree is about to retire after an illustrious career in the Zambian civil service. He is expecting to receive a net of K2.5 million in retirement benefits. As an Investment Advisor, you have been approached by Mr. New Retiree to advise on the options available for him to consider. Advise on the main asset classes available in Zambia clearly showing the common investment time horizon for each. What is the most money you could make over the next year?
1. An investor who recently returned from overseas has decided to invest in a venture which has been proposed by a leading investment company.The investor is expected to receive ten (10) sum payments of $5000 at the end of each year for ten times (10) years. However payment increased on by 5% on the second , 10% on the fourth , 15% on the sixth , 20% on the eighth and 25% on the tenth payment . Calculate the sum that should be paid to him now at an interest of 5 % . 2. An office complex measuring 203m^3 has been offered for sale. The cost of replacing the assets and depreciation is estimated $1200m^2 and 10% respectively. I. Calculate the market value price. II. If an extension of 52m^2 has been made to the office complex to be used as residential facility , calculate the capital value of the residential facility at a rate of 900m^2 depression of 4% III.if land comparable land value is assessed at $30000,calculate the value of the subject property.
Mary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. (Ignore income taxes in this problem). The data pertaining to her investment opportunity are: (see attached image). Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the present value factor you will use for cash inflows that come JUST in year 6? Enter your answer to three decimals.
Problem Solving: Answer the problem. Write your complete solutions and conclusions. 1. Alfred is a bachelor with a stable job. He is thinking of his future plans and one of his goal is to have an investment of ₱1,000,000 after five years. The amount to be invested will earn an interest of 12% compounded quarterly. Determine the amount to be invested by Alfred at 12% interest compounded quarterly.
Please step by step answer.
Bruce is considering the purchase of a restaurant named Hard Rock Hollywood. The restaurant is listed for sale at $1,030,000. With the help of his accountant, Bruce projects the net cash flows (cash inflows less cash outflows) from the restaurant to be the following amounts over the next 10 years: Years Amount 1-6 $ 83,000 (each year) 7 93,000 8 103,000 9 113,000 10 123,000 Bruce expects to sell the restaurant after 10 years for an estimated $1,130,000. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use appropriate factor(s) from the tables provided. Round your answer to 2 decimal places.)Required:1-a. Calculate the total present value of the net cash flows if Bruce wants to make at least 10% annually on his investment. (Assume all cash flows occur at the end of each year.) 1-b. Should he purchase the restaurant?

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