Question
a. An investment is expected to generate $2,000,000 each year for five years. If the firm's cost of funds is 5%, what is the maximum
a. An investment is expected to generate $2,000,000 each year for five years. If the firm's cost of funds is 5%, what is the maximum amount the firm should pay for the investment?
b. You put $200,000 in the bank today; if the annual interest rate paid by the bank is 20.5%, and you do not make any withdrawals for 20 years, what will be your balance at that time?
c. You are offered two jobs. One initially pays $100,000 annually, and your salary will grow annually at 11.5%. The other pays pays $97,000 annually, but your salary will grow at 12%. After ten years, which job pays the higher salary? (for any credit, show your work)
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