You have received two offers on a building lot that you want to sell. Ms. A ’s offer is $20,000 down plus a $110,000 lump sum payment five years from now. Mr. B has offered $20,000 down plus $6000 every quarter for four years. Compare the economic values of the two offers if money can earn 5% compounded monthly.
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You have received two offers on a building lot that you want to sell. Ms. A ’s offer is $20,000 down plus a $110,000 lump sum payment five years from now. Mr. B has offered $20,000 down plus $6000 every quarter for four years. Compare the economic values of the two offers if money can earn 5% compounded monthly.
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- You are trying to evaluate the feasibility of purchasing a land. You plan to rent the plot of land to receive after-tax receipts of $2,500 per month. You are hoping to sell the land in the next ten years to receive after-tax proceeds of US$2.0 million to purchase a building containing at least four apartments. Assume the funds for purchasing the apartment will be drawn from your savings account which is currently earning 2% after taxes and that inflation rate is currently 5%. a) Identify the cash flows, their timing and the required rate of return applicable to calculating the maximum value you should pay for the land. b) Showing all calculations state if you should purchase the land for $1.6 million, justify your decision. What is the maximum price you should pay to acquire the single dwelling unit?To save money for a new house, you want to begin contributing money to a brokerage account. Your plan is to make ten contributions to the brokerage account. Each contribution will be for $2,500. The contributions will come at the beginning of each of the next 10 years, i.e., the first contribution will be made today at t = 0 and the final contribution will be made at t = 9. Assume that the brokerage account pays a 9 percent return with semi-annual compounding. How much money do you expect to have in the brokerage account nine years from now (t = 9)?ms. cruz can buy a piece of property for 6,500,000 cash or 4,000,000 down payment and 4,200,000 in five years if she has money earning 8% converted quarterly, which is a better purchased plan and by how much?
- Your grandfather has offered you a choice of one of the three following alternatives: $14,000 now; $7,250 a year for ten years; or $96,000 at the end of ten years. Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. Assuming you could earn 6 percent annually, compute the present value of each alternative: If you could earn 7 percent annually, compute the present value of each alternative:You can afford payments of $950 per month for the purchase of a house. a) What is the largest amount you can finance for this house at 3.2% APR for 30 years? (Round to the nearest dollar.) b) How much total will you be paying the loan company at the end of 30 years for this house if you are paying $950 per month for 30 years? c) Now you are curious what the payments would be if you financed the amount found in part a) at 3.2% APR for 20 years instead of 30 years. How much would your monthly payments be if you financed the amount you found in part a) for 20 years at 3.2% APR? (Round to the nearest dollar.) d) Using the payments you found from part c), how much total will you pay the loan company at the end of 20 years?An apartment building in your neighborhood is for sale for $175,000. The building has four units, which are rented at $550 per month each. The tenants have long-term leases that expire in 7 years. Maintenance and other expenses for care and upkeep are $9500 annually. A new university is being built in the vicinity and it is expected that the building could be sold for $198,000 after 7 years. What is the internal rate of return for this investment?
- You graduate and receive a $10,000 cheque from your grandparents. You decide to save it toward a down payment on a house. You invest it earning 10% per year, and you think you will need to have $20,000 saved for the down payment. How long will it be before the $10,000 has grown to $20,000? To double the money you received from your grandparents, it will take years. (Round to one decimal place.) Etext pages Ask my instructor Clear allA relative has promised to pay you $93.00 today, and he will pay you additional payments every year for the next five years. Each year he will add $73.00 to the previous payment. (So, the payment in year 1 will equal $166.00). You decide to save every dollar you are given and will invest the money in an account paying 4.00% annual interest. How much money will you have accumulated in five years? Keep in mind that you will have six total cash flows to invest. Submit Answer format: Currency: Round to: 2 decimal places.You are thinking about buying a rental property. Because of the difficulty getting a loan, you are going to pay $350,000 in cash for the house today. You think you can rent out the property for the next 10 years, receiving $1,400 in cash each month after your expenses and taxes. At the end of ten years, you believe you will be able to sell the property for $425,000. If your discount rate is 7.2% annually with monthly compounding, what is the NPV of the rental property? (Assume first payment is 1 month from today)
- Your cousin plans to expand his business and will require $100,000.00 in 6.5 years. The rate of return will be 0.70 percent per month for the first two years. It will go up to 1.00 percent for the rest of the period. Compute the $ amount to set aside today to reach her objective.An engineer purchases a house using only a loan borrowed from a local bank. The loan is offered at an interest rate 5% per year, compounding annually. According to the 25-year mortgage plan, the engineer will have to pay $10000 in the end of every year for 15 years, and after that, $12500 in the end of every year in the following 10 years. What is the price of the house? Choose the closest value to your answer. $160320.67 $157828.25 (c) $154612.70 $163942.33 E $150230.50You graduate and receive a $3,000 cheque from your grandparents. You decide to save it toward a down payment on a house. You invest it earning 9% per year, and you think you will need to have $6,000 saved for the down payment. How long will it be before the $3,000 has grown to $6,000? To double the money you received from your grandparents, it will take years. (Round to one decimal place.)