Question
7.Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,200 at the end of each
7.Marian Plunket owns her own business and is considering an investment. If she undertakes the investment, it will pay $4,200 at the end of each of the next 33 years. The opportunity requires an initial investment of $1,050 plus an additional investment at the end of the second year of $5,250.
What is the NPV of this opportunity if the interest rate is 2.3 % per year?
The NPV of this opportunity is $_?
Should Marian take it? yes or no?
8. You are a real estate agent thinking of placing a sign advertising your services at a local bus stop. The sign will cost $4,700
and will be posted for one year. You expect that it will generate additional revenue of $ 705 a month. What is the payback period?
The payback period is ?? months (Round to the nearest cent.)
9. You have just been offered a contract worth $ 1.00 million per year for 55 years. However, to take the contract, you will need to purchase some new equipment. Your discount rate for this project is 12.0 %.
You are still negotiating the purchase price of the equipment. What is the most you can pay for the equipment and still have a positive NPV?
The most you can pay for the equipment and achieve the 12.0 % annual return is $__?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started