Answer:
IRR of the project is 12.7147%, arrived at using the IRR function of Excel with cash flows as follows:
Yield on alternate opportunity Ie., investment in bonds is 6%.
Since the rate of return on Spa project is much higher than investment in bonds, it is advised to take up the Spa project.
iovanni waristo be an entreprenur and deades to he savidopan a Spa. Afler dotng his reseavch,...
John Barton is both excited and amazed. Excited because on graduating from college one year ago at age 22, he landed a good job with a commercial leasing firm and he is enjoying the work. His company has good benefits and has just given him a raise so that in his next (2nd) year of employment he will be earning $55,000 per year. He is amazed because even with this raise he feels that money is just as scarce as...
Problem 2-25 (Algorithmic) George Johnson recently inherited a large sum of money; he wants to use a portion of this money to set up a trust fund for his two children. The trust fund has two investment a bond fund and 2) a stock fund. The pro ected returns over the life of the invest ents are 9% or the bond fund and 11%, forthe stock options: 1 nd. hate er portion of the inheritance he finally decides to commit...
David inherited an annuity worth $4,169.87 from his uncle. The annuity will pay him five equal payments of $1,100 at the end of each year. The annuity fund is offering a return of _______. David's friend, Sagar, wants to go to business school. While his father will share some of the expenses, Sagar still needs to put in the rest on his own. But Sagar has no money saved for it yet. According to his calculations, it will cost him...
i) He owes $80,000 for his house which he believes is worth $150,000 ii) His car is worth $20,000 against which there there is $2,000 on the remaining bank loan. iii) his stock protfolio has risen to $50,000 iv) he has a $10,000 bank balance in his bank account which is earning him 1.2% annual interest rate v) and the value of this belonging is $45,000. he has just received his monthly paycheck for $6,000 and he is trying to...
Please show work, I am having trouble finding where I am going
wrong on this part.
Dave Fletcher, the general manager of North Carolina Engineering Corporation (NCEC), thinks that his firm's engineering services contracted to highway construction firms are directly related to the volume of highway construction business contracted with co n armes n his goograph area. He wonders this is eal y su and t is an his f rmati n help hım p an tı s ope a...
Your friend Bob just retired after running a donut shop for 40 years. He has saved $5 million in his retirement accounts. Now he has his money in bond funds that have a 5% annual rate of return. How much will Bob be able to withdraw at the beginning of each month for the next 30 years. Assume he will have $0 left after year 30. a) $26,730 b) $24,057 c) $21,384 d) $4,188 e) $166,667
Hermes Conrad is celebrating his birthday and wants to start saving for his anticipated retirement. He has the following years to retirement and retirement spending goals: Years until retirement = 30; Amount to withdraw each year = $90,000; Years to withdraw in retirement = 20; Investment rate = 8%. Because Hermes is planning ahead, the first withdrawal will not take place until one year after he retires. He wants to make equal annual deposits into his account for his retirement...
Your best friend Frank just celebrated his 30th birthday and wants to start saving for his anticipated retirement. Frank plans to retire in 35 years and believes that he will have 20 good years of retirement and believes that if he can withdraw $90,000 at the end of each year, he can enjoy his retirement. Assume that a reasonable rate of interest for Frank for all scenarios presented below is 8% per year. This is an annual rate, review each...
The following situations should be considered independently. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) 1. John Jamison wants to accumulate $77,709 for a down payment on a small business. He will invest $39,000 today in a bank account paying 9% interest compounded annually. Approximately how long will it take John to reach his goal? 2. The Jasmine Tea Company purchased merchandise...
John Barton is both excited and amazed. Excited because on graduating from college one year ago at age 22, he landed a good job with a commercial leasing firm and he is enjoying the work. His company has good benefits and has just given him a raise so that in his next (2nd) year of employment he will be earning $55,000 per year. He is amazed because even with this raise he feels that money is just as scarce as...