Kunkle Company wishes to earn 10% annually on its investments. If Kunkle makes an investment that equals or exceeds that rate, it considers it a success. Assume that Kunkle invests $4.6 million and gets $575,000 in return at the end of each year for X years. Assume that Kunkle can't invest for fractional parts of a year. What is the minimum value of X (number of years) for which Kunkle will consider the investment a success?

Kunkle Company wishes to earn 10% annually on its investments. If Kunkle makes an investment that equals or exceeds that rate, it considers it a success. Assume that Kunkle invests $4.6 million and gets $575,000 in return at the end of each year for X years. Assume that Kunkle can't invest for fractional parts of a year. What is the minimum value of X (number of years) for which Kunkle will consider the investment a success?

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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Your company has an opportunity to invest in four companies. You are trying todetermine which of these investments make sense. Your company has a 9% cost ofcapital. It will invest in these companies and receive an annual cash dividend eachyear starting one year after the investment. At the end of the term of investment, theinvestment will be scrapped with no salvage value. (a) Determine the internal rate ofreturn for each investment. Round off to the nearest integer discount rate, withdetailed calculation process. (b)Which investments would you recommend yourcompany make?
8. Kunkle Company wishes to earn 7% annually on its investments. If Kunkle makes an investment that equals or exceeds that rate, it considers it a success. Assume that Kunkle invests $4.0 million and gets $800,000 in return at the end of each year for X years. What is the minimum value of X (number of years) for which Kunkle will consider the investment a success? Assume that Kunkle can't invest for fractional parts of a year. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Multiple Choice 2 years. 5 years. 7 years. 4 years.
Suppose you invest $2,000 today and receive $11,000 in five years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $2,000 upfront, but pays an equal amount at the end of each year for the next five years. If this investment has the same IRR as the first one, what is the amount you will receive each year?
Suppose you invest $3,000 today and receive $10,000 in 25 years. a. What is the internal rate of return (IRR) of this opportunity? b. Suppose another investment opportunity also requires $3,000 upfront, but pays an equal amount at the end of each year for the next 25 years. If this investment has the same IRR as the first one, what is the amount you will receive each year? a. What is the internal rate of return (IRR) of this opportunity? The IRR of this opportunity is%. (Round to two decimal places.) b. Suppose another investment opportunity also requires $3,000 upfront, but pays an equal amount at the end of each year for the next 25 years. If this investment has the same IRR as the first one, what is the amount you will receive each year? The periodic payment that gives the same IRR is $ (Round to the nearest cent.)
1. Suppose that annual income from a rental property is expected to start at P65,000 per year and decrease at a uniform amount of P2,500 each year after the first year for the 15-year expected life of the property. The investment cost is P400,000, and interest is 9% per year. Is this a good investment? Assume that the investment occurs at time zero (now) and that the annual income is first received at end of year one.
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.)
Suppose you have an investment worth $800 and you want it to increase in value by 400%. a) What is the desired future value of the investment? For full marks your answer(s) should be rounded to the nearest dollar. FV = $ 0.00 b) How long will it take the investment to reach the desired future value, if it earns 5.50% compounded semi-annually? Your an be rounded up to the nearest month. Time = 0 years 0 months
An investment will pay $150 at the end of each of the next 3 years, $300 at the end of Year 4, $600 at the end of Year 5, and incur a $500 cost at the end of Year 6. If other investments of equal risk earn 6.7% annually, what is this investment’s present value?
Consider an investment of $X. Suppose that you are able to earn 10% a year on your investment rather than 5% per year over 7 years. At the end of those 7 years, how much extra interest (compared to the original 5%) will you have earned on the investment?
three years ago maxwell invested 6020. In 1 year from today he expects to have 9120. If maxwell expects to earn the same annual return after 1 year from today as the annual rate implied from the past and expected values given in the problem, then how much does maxwell expect to have in 5 years from today? a .) 15328.14 b.)13816.35 c.)15868.14 d.)18224.63
Assume that at the beginning of the year, you purchase an investment for $7,200 that pays $100 annual income. Also assume the investment's value has decreased to $6,800 by the end of the year. (a) What is the rate of return for this investment? (Input the amount as a positive value. Enter your answer as a percent rounded to 2 decimal places.) Rate of return % (b) Is the rate of return a positive or negative number? Positive O Negative
An investment will pay $150 at the end of each of the next 3 years, $300 at the end of Year 4, $600 at the end of Year 5, and incur a $500 cost at the end of Year 6. If other investments of equal risk earn 6.7% annually, what is this investment’s present value? Its future value?

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