Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales-commission selling

Assume that you are about to sell property (a vacant parcel of real estate) you own but otherwise have no use for. The net-of-sales-commission selling price for the property is $500,000. You are willing to finance this transaction over a 19-year period and have told the buyer that you expect an 8% pretax return on the transaction. The buyer has asked you for a payment schedule under several alternatives.

Required:

1. What will be your total cash receipts, to earn a 8% return, if payments are received from the purchaser:

NOTE: to answer the above questions, use the PMT function in Excel, as follows:

PMT(rate,nper,pv,fv,type)

where: rate is the interest rate for the loan, nper is the total number of payments, pv is the present value (i.e., the total amount that a series of future payments is worth now; also known as the principal), fv is the future value (or a cash balance you want to attain after the last payment is made; if fv is omitted, it is assumed to be 0 (zero)), and type is the number 0 (zero) or 1 and indicates when payments are due (if omitted, or 1 is chosen, it is assumed that payments occur at the end of each period).

Additionally, what is the total of cash receipts over a 19-year period for each of the four situations?

a. At the end of each week?

b. At the end of each month?

c. At the end of each quarter?

d. At the end of each year?

(Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

ISE Fundamental Managerial Accounting Concepts

Authors: Thomas Edmonds, Christopher Edmonds, Mark Edmonds, Philip Olds

9th Edition

1260565483, 9781260565485

More Books

Students also viewed these Accounting questions