Present Value $ 400 2,091 33,105 32,800 Years Interest Rate 12 % 10% 15 % 22 % Future Value $ 1,255 3,850 388,620 202,748

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Solve using Rate of Return Method

plan A plan B plan C Down payment 1,789.91 2,309.65 3,764.51 Annual payments 5,097.70 7,450.16 9,845.78 Years 20 20 20 Discount rate 12% 12% 12% What is the present value of plan B?

Future values. Fill in the future values for the following table, a. Use the future value formula, FV=PVX (1+r)^. b. Use the TVM keys from a calculator. c. Use the TVM function in a spreadsheet. using one of the three methods below:

Chapter 10 Discussion Q1 A property is sold for $200,000. Typical financing terms are an 85 percent loan with a 10 percent interest rate over 15 years. If the gross income per year is $30,000, what is the overall capitalization rate?

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ces Year 0 1 Cash Flow (A) -$430,000 41,500 2 64,500 3 81,500 4 545,000 Cash Flow (B). -$ 42,500 20,900 12,800 21,100 17,900 The required return on these investments is 10 percent. a. What is the payback period for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. b. What is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. c. What is the IRR for each project? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e. d. What is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. e. Based on your answers in (a) through (d), which project will you finally choose? a. Project A Project B b. Project A Project B years years Q Search < Prev 5 of 5 Next L

QUESTION 42 Compute the missing variable for each of the following alternatives of investments to accumulate $1,000,000. for 30 years @ 6% annual interest rate: Following are appropriate factors from tables:    Table %   /  n Present Value of annuity due $1 Present Value of ordinary annuity of $1 Present value of $1 Future Value of ordinary annuity of $1 6%/30 12.15812 13.76483 .17411 79.05819   $????????? invested annually at the end of the year. Required Computations:      $12,648.91     $72,648.92     $33,3333.33     $11,927.43

QUESTION 41 Compute the missing variable for each of the following alternatives of investments to accumulate $1,000,000. for 30 years @ 6% annual interest rate: Following are appropriate factors from tables:    Table %   /  n Present Value of annuity due $1 Present Value of ordinary annuity of $1 Present value of $1 Future Value of ordinary annuity of $1 6%/30 12.15812 13.76483 .17411 79.05819   One single deposit of $???????? for 30 years. Required Computations:      $166,666.66     $174,110       $175,933.83     $126,489