Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I NEED HELP WITH THESE QUESTIONS PLEASE!!! Questions 1-3 are based on the following information. Discounted Cash Flow Valuation. Aaron is considering an investment that

I NEED HELP WITH THESE QUESTIONS PLEASE!!!

image text in transcribedimage text in transcribedimage text in transcribed

Questions 1-3 are based on the following information. Discounted Cash Flow Valuation. Aaron is considering an investment that will pay $7,500 a year for five years, starting one year from today. 1. What is the maximum amount he should pay for this investment if he desires a rate of return of 9.4 percent? a. $26,523.22 b. $27,117.36 C. $28,872.11 d. $30,154.50 2. This is an example of: a. a set of unequal cash flows. b. an ordinary annuity. c. a perpetuity. d. an annuity due. 3. What interest rate would be required if he could only invest $25,000? a. 14.89% b. 13.23% c. 15.94% d. 15.24% Questions 1-3 end. Questions 4-5 are based on the following information. Discounted Cash Flow Valuation. Your best friend will receive $120,000 a year for 10 years, starting today. He wants you to use the information you received in your Business Finance class to help him answer some questions. 4. If the rate of return is 8.4 percent, what are these payments worth today? a. $857,316.21 b. $840,521.22 c. $790,882.12 d. $788,902.31 5. How much would he receive at the beginning of each year, starting today, if he invested $1,000,000? a. $140,041.41 b. $139,971.69 c. $141,654.32 d. $138,735.01 Questions 4-5 end. Questions 6-7 are based on the following information. Installment loans. You and your spouse want to purchase a new home that costs $400,000. Your plan is to pay 20 percent down in cash and finance the balance over 20 years at 4.25 percent. 6. What will be your monthly mortgage payment including principal and interest? a. $2,476.94 b. $2,000.00 C. $1,918.55 d. $1,981.55 7. What will be the remaining balance on the loan after 10 years? a. $241,799.83 b. $210,000.00 c. $193,439.87 d. $193,139.87 Questions 6-7 end. 8. TBUS 350 Investments is considering a project that will produce cash inflows of $10,000 at the end of Year 1, $25,000 in Year 2, $38,000 in Years 3 & 4. What is the present value of these cash inflows at a discount rate of 11.5 percent? a. $81,007.65 b. $81,076.54 C. $80,076.22 d. $82,444.02

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_2

Step: 3

blur-text-image_3

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

Options Futures And Other Derivatives

Authors: John C. Hull

11th Edition

013693997X, 9780136939979

More Books

Students also viewed these Finance questions