An FHA-insured loan in the amount of $157,500 at 5.5% for 30 years closed on July 17. The first monthly payment is due on Septem
1 answer:
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Answer: Net present value = $446,556
Explanation:
First we'll compute the Weighted Average Cost of Capital :
Weighted Average Cost of Capital =
= 0.163× + 0.0729× (1 - 0.35 )×
= 0.1255
where;
= Cost of equity
= Proportion of equity
= Cost of debt
= Proportion of debt
Now, we'll compute the cost of capital using the following formula:
Cost of capital = Weighted Average Cost of Capital + adjustment factor
= 0.1255 + 0.0125
= 0.138 or 13.8%
∴ Net present value = Cash outflows - Total PV of cash flows
= $3,900,000 - $1,260,000 (Annuity value of 13.8% for 5 years)
= $3,900,000 - $3,453,444
= $446,556
Therefore, the correct answer is option(b).
Answer:
85 less rooms this year than last
Explanation:
The number of rooms (n) occupied for this month last year is given by the Room Revenue ($231,470) divided by the daily rate ($76.72):
The number of rooms occupied last year is larger than the number of rooms occupied this year by:
The hotel occupied 85 less rooms this year than last.