How much more would you earn in the first investment than in the second investment?

Q: What is capital rationing?

A:

Q: How would an increase in the interest rate effect the present value of an annuity problem (all other…

A: Present value of the annuity The amount of money that would be required today to support a series of…

Q: What are the differences between a money market and a capital market?

A: Two main sources of finance are: Internal sources External sources. Company requires funds for…

Q: What is meant by the concept of “potential savings (profits)”?

A: Profit is the total revenues less all costs and expenses. In other words, profit is the net earnings…

Q: What is the cost of capital rate in the question?

A: Cost of capital is the WACC of the project. WACC is equal to weighted average cost of capital. WACC…

Q: Why is it necessary to determine how long you can expect to reap benefit from the investment?

A: Individuals as well as firms often make investment and specify the time limit for which this…

Q: What causes the marginal rate of return to change over time?

A: Introduction: Marginal rate of return can be defined as the return attained or earned by holding a…

Q: What is the net present value of an annuity?

A: Net present value is defined as the temporal variation in the present value of cash inflows and…

Q: When considering multiple possible investments, why are rates of return preferable than monetary…

A: An investment's net profit or loss over a certain period expressed as a percentage of the…

Q: What is growth rate?

A: A growth rate is the percentage increase in the cash flows of the company. A growth can be measured…

Q: write three benefits of the knowledge of the time value of money?

A: Time value of money refers to the worth of a money received today is different from a worth of a…

Q: 2. How might a sudden increase in people's expectations of future real estate prices affect interest…

A: Future real estate prices means expected price or value of real estate assets at a particular point…

Q: What is the annual profit?

A: The cost-volume profit analysis deals with the cost of the product and the profit generated with the…

Q: What are the advantages/disadvantages of real estate as alternative investments?

A: Following are the advantages and disadvantages of real estate as alternative investments:…

Q: Suppose you know that an investment will earna positive return in the future. Why is it important to…

A: The investment may provide a positive return in the future, but the worth of receiving it in future…

Q: Will some of the parties receive a preferred return? Will the preferred return be paid from annual…

A: The preferred return is a distribution of profit earned by the organization to their elite class of…

Q: What is growing annuity?

A: Introduction: Annuities are insurance contracts that agrees to pay you steady income either…

Q: Describe the affects of the present value of an investment.

A: Present value of the investment: Present value of the investment is calculated using the cash flows…

Q: How can we calculate the present worth of actual dollars?

A: Present worth is the current value with a respective rate of return, of a future measure of cash or…

Q: What is compounding interest? How does compound interest increase wealth?

A: Compounding Interest: It refers to the interest estimated on the initial principal value which also…

Q: Which you prefer, equity or fixed income?

A: Differences between equity and fixed income: Equity: Corporates issues most of the equity There is…

Q: what if iternal rate of return is equal cost of capital ?what is decision

A: IRR or internal rate of return is the % return that the project generates.  IRR is the rate at which…

Q: Do you have to invest in order to create generational wealth?

A: Generational wealth-This is also known by the name legacy wealth or family wealth and generational…

Q: What effect do interest rates have on the calculation of future and present value? How does the…

A: The time value of money is a concept that is based on the idea that a given amount of money is worth…

Q: o you think a person would opt to use the Payback Period Method instead of the Net Present Value or…

A: Given information : . NPV refers to the difference between the sum of the present value of expected…

Q: When considering several possible investments, why are rates of return preferable than monetary…

A: The return, often called a financial return, is the sum of money wasted or earned on an investment…