Question
13. Sasha owns two investments, A and B, that have a combined total value of 52,900 dollars. Investment A is expected to pay 21,000 dollars
13. Sasha owns two investments, A and B, that have a combined total value of 52,900 dollars. Investment A is expected to pay 21,000 dollars in 1 year(s) from today and has an expected return of 17.64 percent per year. Investment B is expected to pay 81,846 in 8 years from today and has an expected return of R per year. What is R, the expected annual return for investment B? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.
10. Violet Sky Banking just bought a new vending machine. To pay for the vending machine, the company took out a loan that requires Violet Sky Banking to pay the bank a special payment of 18,300 dollars in 4 month(s) and also pay the bank regular payments. The first regular payment is expected to be 3,860 dollars in 1 month and all subsequent regular payments are expected to increase by 0.37 percent per month forever. The interest rate on the loan is 1.48 percent per month. What was the price of the vending machine?
11. You own a store that is expected to make annual cash flows forever. The cost of capital for the store is 12.56 percent. The next annual cash flow is expected in one year from today and all subsequent cash flows are expected to grow annually by 4.33 percent. What is the value of the store if you know that the cash flow in 3 years from today is expected to be 26,400?
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