Answer:
Cash flow>
One 15,000 per year
Two 24,000 per year
NPV>
one -16,452
two -15,474
<u>As both options make a negative cashflow </u>
none of them are viable considering a cost of capital of 10%
Explanation:
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Net present value for each alternative>
First>
![\left[\begin{array}{ccc}Year&cash-flow&PV\\0&-64000&-64000\\1&15000&13636\\2&15000&12397\\3&15000&11270\\4&15000&10245\\\\Total&&-16452\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bccc%7DYear%26cash-flow%26PV%5C%5C0%26-64000%26-64000%5C%5C1%2615000%2613636%5C%5C2%2615000%2612397%5C%5C3%2615000%2611270%5C%5C4%2615000%2610245%5C%5C%5C%5CTotal%26%26-16452%5C%5C%5Cend%7Barray%7D%5Cright%5D)
Second>
![\left[\begin{array}{ccc}Year&cashflow&PV\\0&-120000&-120000\\1&24000&21818\\2&24000&19835\\3&24000&18032\\4&24000&16392\\5&24000&14902\\6&24000&13547\\Total&&-15474\\\end{array}\right]](https://tex.z-dn.net/?f=%5Cleft%5B%5Cbegin%7Barray%7D%7Bccc%7DYear%26cashflow%26PV%5C%5C0%26-120000%26-120000%5C%5C1%2624000%2621818%5C%5C2%2624000%2619835%5C%5C3%2624000%2618032%5C%5C4%2624000%2616392%5C%5C5%2624000%2614902%5C%5C6%2624000%2613547%5C%5CTotal%26%26-15474%5C%5C%5Cend%7Barray%7D%5Cright%5D)
Wow! Ann's loan for 12,000$ with an annual interest rate of 5.65% for one year is 2,124. Multiply the 2,124$ annual interest rate time 4 years and the total annual interest rate would be 8,496$!
Add that to the cost of the loan
12,000 + 8496 = $20,496.00 US dollars is the total cost of the loan if no late payments are made that would accrue an additional monetary fine or penalty that would be added to the totality of the loan anually and increase the entire amount substantially.
The first step is planning and strategic management. Strategic planning is a hierarchical administration action that is utilized to set needs, center vitality and assets, reinforce operations, guarantee that representatives and different partners are progressing in the direction of shared objectives, set up assertion around expected results/comes about, and survey and alter the association's heading in light of an evolving situation.
Answer:
FV= $116,912.40
Explanation:
Giving the following information:
Initial investment= $82,000
Number of periods= 6*2= 12 semesters
Interest rate= 0.06/2 = 0.03
<u>To calculate the future value, we need to use the following formula:</u>
FV= PV*(1+i)^n
FV= 82,000*(1.03^12)
FV= $116,912.40
Answer:
Option A is the more convinient.
Explanation:
Giving the following information:
She wants you to choose which one of the following sets of cash flows you would like to receive:Option A: Receive a one-time gift of $ 10,000 today. Option B: Receive a $1500 gift each year for the next 10 years. The first $1500 would be received 1 year from today. Option C: Receive a one-time gift of $18,000 10 years from today.
We will assume a discount rate of 10%.
Option A:
Present value= $10,000
Option B:
Final value= {A*[(1+i)^n-1]}/i
A= annual deposit
FV= {1500*[(1.10^10)-1]/0.10= 23,906.14
PV= FV/(1+i)^n
PV= 23,906.14/1.10^10= $9,216.85
Option C:
PV= 18,000/1.10^10= $6,939.80