Question

47. An investor purchased a property with an equity investment of $14,500. Suppose the ATCF of the first five years are $1,000, $2,000, $3,000, $4,000, and $5,000. The ATER at the end of the five is $10,000. What is the after tax NPV on equity given the required rate of return of 14 percent? a. $100 b. $-500 c. $-400 d. $-350 48. What is the after tax IRR on equity of the above project? a. 13.2 percent. b. 14.2 percent. c. 14.9 percent. d. 15.3 percent. 49. What is the sum of the present value of all after tax cash flows (ATCFs)? a. $9,400 b. $2,600 c. $-400 d. $14,600
how can i calculate these questions on a financial calculator?

Answer 1

@147. 1.ooo Question 48 Calculation of NPV (Recquired Rate of Return = 14%) a Initial Investment = $ 14,500 (Year o Cash outflow) 6) Annual Cashflow's Pue Cashflau Year Cashflaw's Present Value 1.000 877 ((1+014)') 2,000 1.0539 3.000 2.025 4.000 2.368 S000 2.597 10,000 5.194 Value ofter S Years Present Value of = $ 14.600 Annual Cashflaue So 1 NPV = Present Salue of - Initial Annual Cashflow's Inuestment = $ 14,600 - $14. Soo NPV = $ 100 21000 2 TH.14) 3,000 7.14) 4.000 a I t.14 S.OOO 5 (77.74 10,000s So, Optian a $ 100 is Correct

Question 48 Calculation of IRR (By trial x Errar Methad ) NPV @ 14% is $100 Jower Rate) NPV @ 151. is – $400 (Higher Rate) JRR = Lower + Npv at x Difference Rate Louser Rote in Rate - NPV at - NP v at Doccer Rate Higher Rote = 14 + - 100 100 - (-400) x (15-14) I I IRR = So, ception 14.2 %. br. 14.2 4. is Correct