1.Suppose SAW Water Works Inc is evaluating a proposed budget that will require an initial investment of...
Question:
1.Suppose SAW Water Works Inc is evaluating a proposed budget that will require an initial investment of $100,000. The project is expected to have the following cash flows: Year Cash Flow 1 $ 50,000 2 $ 75,000 3 $150,000 The Weight Average Cost of Capital (WACC) is 9%. Based on the cash flows, what is this project's Net Present Value ?
2.Your friends suggest that you take a 30 year mortgage instead of a 15-year mortgage, although you think it may be too long and you would probably lose a lot of money on interest. If your bank approves both a 30-year, $750,000 loan at a fixed interest rate of 10% (APR) and a 15-year,$750,000 loan at a fixed interest rate of 15%, what will be the difference in monthly payments of either mortgages?
3.Gary loves shopping for electronic gadgets and he has decided to start saving. At the end of each year, he will deposit $2,000 in his local bank, which pays an annual interest of 6%. How much will he save by end of eight years?