The monthly income from a piece of commercial property is $1,200. Annual expenses are $3,000 for...
The monthly income from a piece of commercial property is $1,200. Annual expenses are $3,000 for upkeep of the property and $1,000 for property taxes. The property is surrounded by a security fence that cost $4,000 to install four years ago. Assume 52 weeks in a year and end-of-year cash flows.
a. If i = 12% per year (the MARR) is an acceptable interest rate, how much could you afford to pay now for this property if it is estimated to have a resale value of $150,000 10 years from now?
b. Draw a cash-flow diagram for this situation. Use the viewpoint of the buyer.
c. Based on this situation, give an example of an opportunity cost.
d. Based on this situation, give an example of a fixed cost.
e. Based on this situation, give an example of a sunk cost.
f. If the 12% interest had been a nominal interest rate, what would the corresponding effective annual interest rate have been with bi-weekly (every two weeks) compounding?
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The monthly income from a piece of commercial property is $1,200. Annual expenses are $3,000 for...
The monthly income from a piece of commercial property is $1,200. Annual expenses are $3,000 for...
The monthly income from a piece of commercial property is $1,200. Annual expenses are $3,000 for upkeep of the property and $1,000 for property taxes. The property is surrounded by a security fence that cost $4,000 to install four years ago a. If i = 12% per year (the MARR) is an acceptable interest rate, how much could you afford to pay now for this property if it is estimated to have a resale value of $150,000 10 years from...
The annual rental income from a duplex is $9600 and annual expenses are $2500. If the...
The annual rental income from a duplex is $9600 and annual expenses are $2500. If the potential buyer anticipates that the duplex could be sold for $75000 at the end of 10 years, what is the purchasing price that could be justified? Assume that the interest rate is 8% per annum for this scenario. Draw the cash flow diagram for this model.
Suppose that annual income from a rental property is expected to start at $1,350 per year...
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Problem 4-75 (book/static) Question Help Suppose that annual income from a rental property is expected to...
Problem 4-75 (book/static) Question Help Suppose that annual income from a rental property is expected to start at $1,300 per year and decrease at a uniform amount of $50 each year after the first year for the 15-year expected life of the property. The investment cost is $8,000, and iis 9% per year. Is this a good investment? Assume that the investment occurs at time zero (now) and that the annual income is first received at EOY one. Click the...
Your sister just bought a new car having a sticker price (manufacturer's suggested retail price) of...
Your sister just bought a new car having a sticker price (manufacturer's suggested retail price) of $36,000. She was crafty and was able to negotiate a sales price of $33,500 from the auto dealership. In addition, she received $4,500 for her old trade-in car under the US government's "Cash for Clunkers" program. If her new car will have a resale value of $3.500 after seven years when your sister will shop for a replacement car, what is the annual capital...
Question 2 Not yet answered Calculate the annual worth Gears I through 6) of cash flow...
Question 2 Not yet answered Calculate the annual worth Gears I through 6) of cash flow given below. Use an interest rate of 10% per year Year 0 5 6 Cash Flow 50 60 60 60 60 1 3 4 Marked out of 10.00 2. 30 Flag question Select one: a. 48 b. 58 c. 34 d. 53 e. 65 Previous page If labour savings are estimated to be $25000 per 6 months, how much can INDE232 Company afford to...
Calculate the future value in 5 years of $2100 today with annual compounding and a 10%...
Calculate the future value in 5 years of $2100 today with annual compounding and a 10% annual interest rate. Suppose someone saves $1000 today and will have $1052 one year from today. If compounding is daily (assume 365 days in a year), what must be the interest rate on this account? Jane offers Kathy the following deal. Jane will give Kathy $900 today if Kathy gives Jane $1100 in 2 years-time. Suppose there is quarterly compounding and the quarterly interest...
Calculate the future value in 5 years of $2100 today with annual compounding and a 10%...
Calculate the future value in 5 years of $2100 today with annual compounding and a 10% annual interest rate. Suppose someone saves $1000 today and will have $1052 one year from today. If compounding is daily (assume 365 days in a year), what must be the interest rate on this account? Jane offers Kathy the following deal. Jane will give Kathy $900 today if Kathy gives Jane $1100 in 2 years-time. Suppose there is quarterly compounding and the quarterly interest...
Suppose that annual income from a rental property is expected to start at $1,350 per year and decrease at a uniform amount of $60 each year after the first year for the 12-year expected life of the property. The investment cost is $7,700, and iis 8% per year. Is this a good investment? Assume that the investment occurs at time zero (now) and that the annual income is first received at EOY one. Click the icon to view the interest...
Problem 4-75 (book/static) Question Help Suppose that annual income from a rental property is expected to start at $1,300 per year and decrease at a uniform amount of $50 each year after the first year for the 15-year expected life of the property. The investment cost is $8,000, and iis 9% per year. Is this a good investment? Assume that the investment occurs at time zero (now) and that the annual income is first received at EOY one. Click the...
Your sister just bought a new car having a sticker price (manufacturer's suggested retail price) of $36,000. She was crafty and was able to negotiate a sales price of $33,500 from the auto dealership. In addition, she received $4,500 for her old trade-in car under the US government's "Cash for Clunkers" program. If her new car will have a resale value of $3.500 after seven years when your sister will shop for a replacement car, what is the annual capital...
Question 2 Not yet answered Calculate the annual worth Gears I through 6) of cash flow given below. Use an interest rate of 10% per year Year 0 5 6 Cash Flow 50 60 60 60 60 1 3 4 Marked out of 10.00 2. 30 Flag question Select one: a. 48 b. 58 c. 34 d. 53 e. 65 Previous page If labour savings are estimated to be $25000 per 6 months, how much can INDE232 Company afford to...
Calculate the future value in 5 years of $2100 today with annual compounding and a 10% annual interest rate. Suppose someone saves $1000 today and will have $1052 one year from today. If compounding is daily (assume 365 days in a year), what must be the interest rate on this account? Jane offers Kathy the following deal. Jane will give Kathy $900 today if Kathy gives Jane $1100 in 2 years-time. Suppose there is quarterly compounding and the quarterly interest...
Calculate the future value in 5 years of $2100 today with annual compounding and a 10% annual interest rate. Suppose someone saves $1000 today and will have $1052 one year from today. If compounding is daily (assume 365 days in a year), what must be the interest rate on this account? Jane offers Kathy the following deal. Jane will give Kathy $900 today if Kathy gives Jane $1100 in 2 years-time. Suppose there is quarterly compounding and the quarterly interest...
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