Question
A) Silver Sun Banking just bought a new trampoline park. To pay for the trampoline park, the company took out a loan that requires Silver
A) Silver Sun Banking just bought a new trampoline park. To pay for the trampoline park, the company took out a loan that requires Silver Sun Banking to pay the bank a special payment of 17,500 dollars in 7 month(s) and also pay the bank regular payments. The first regular payment is expected to be 1,800 dollars in 1 month and all subsequent regular payments are expected to increase by 0.72 percent per month forever. The interest rate on the loan is 1.59 percent per month. What was the price of the trampoline park?
B) You own a store that is expected to make annual cash flows forever. The cost of capital for the store is 18.59 percent. The next annual cash flow is expected in one year from today and all subsequent cash flows are expected to grow annually by 1.18 percent. What is the value of the store if you know that the cash flow in 5 years from today is expected to be 9,700?
C) Pablo has an investment worth 135,095 dollars. The investment will make a special payment of X to Pablo in 6 quarters in addition to making regular quarterly payments to Pablo forever. The first regular quarterly payment to Pablo is expected to be 1,060 dollars and will be made in 3 months. All subsequent regular quarterly payments are expected to increase by 0.93 percent per quarter forever. The expected return for the investment is 1.77 percent per quarter. What is X, the amount of the special payment that will be made to Pablo in 6 quarters?
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