PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Question
Chapter 11, Problem 6PS
Summary Introduction
To discuss: Whether person X consider the option to purchase building or to develop a restaurant by using net present values.
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Students have asked these similar questions
You have an opportunity to purchase a piece of vacant land for $30,000 cash. If you plan to hold it for 15
years and then sell it at a profit. During this period, you would have to pay annual property taxes of $600
and have no income from the property. Assuming that you would want a 10% rate of return from the
investment,
a) Draw a cashflow diagram.
b) What net price would you have to sell it in the next 15 years?
Explain the importance of studying time value of money.
Case study
a. Let's say your friend offer simple investment. You are planning to buy an asset
for RM 335. This investment is very safe. You would sell off the asset in three
years for RM 400. You know you could invest RM 335 elsewhere at 10 percent
with very little risk. What do you think of the proposed investment?
A real estate property is on the market. You have estimated it will give you net cash flows of $5353 per month. You hope to sell it in 7 years for $334380. Your required return is 9.24%, how much should you be willing to pay for the property today?
Answer:
Chapter 11 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 11 - Capital budgeting process True or false? a. The...Ch. 11 - Capital budgeting process Explain how each of the...Ch. 11 - Capital budgeting process Draw up an outline or...Ch. 11 - Prob. 4PSCh. 11 - Biased forecasts Look back to the cash flows for...Ch. 11 - Prob. 6PSCh. 11 - Prob. 7PSCh. 11 - Prob. 8PSCh. 11 - Market prices Suppose the current price of gold is...Ch. 11 - Prob. 10PS
Ch. 11 - Prob. 11PSCh. 11 - Prob. 12PSCh. 11 - Prob. 13PSCh. 11 - Economic rents True or false? a. A firm that earns...Ch. 11 - Prob. 16PSCh. 11 - Economic rents Thanks to acquisition of a key...Ch. 11 - Prob. 18PSCh. 11 - Prob. 19PSCh. 11 - Prob. 20PSCh. 11 - Prob. 21PSCh. 11 - Prob. 22PSCh. 11 - Economic rents Taxes are a cost, and, therefore,...Ch. 11 - Prob. 1MCCh. 11 - Libby Flannery, the regional manager of Ecsy-Cola,...
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