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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!!!
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. $82,444.02Step by Step Solution
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