Majestic Theaters has plans to build a new $30 million movie theater and intends to finance this project through the sale of add
1 answer:
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Answer:
A. 6.75%
Explanation:
In this question, we use the Rate formula which is shown in the spreadsheet.
The NPER represents the time period.
Given that,
Present value = $1,021.16
Future value or Face value = $1,000
PMT = 1,000 × 7% ÷ 2 = $35
NPER = 13 years × 2 = 26 years
The formula is shown below:
= Rate(NPER,PMT,-PV,FV,type)
The present value come in negative
So, after solving this, the pretax cost of debt is 6.75% (3.38% × 2)
Answer:
the amount of money that must be invested now is $21068.87
Explanation:
Given that:
Nominal interest = 10%
Annuity = 7000
n = 8 years
The Effective interest rate is calculated by using the formula:
Effective interest rate =
Effective interest rate =
Effective interest rate = 0.1045
Effective interest rate = 10.45 %
Thus ; the the amount of money that must be invested now is the present value with the annuity of $7, 000 per year for 12 years, starting eight years from now.
PV = 7000 × 6.666056912 × 0.4515171371
PV = $21068.87
Thus; the amount of money that must be invested now is $21068.87