Level 3: Pr 3) Oliver Tree buys a car for $105,000. His car depreclates 4% every year. a) Write an equation that represents the value of Oliver Tree's car over time: TT 14 b) Little Ricky offers to buy his car for $65,000 after 8 years. Should he accept Little Ricky's offer? Explain why or why not. >> ctl

Level 3: Pr 3) Oliver Tree buys a car for $105,000. His car depreclates 4% every year. a) Write an equation that represents the value of Oliver Tree's car over time: TT 14 b) Little Ricky offers to buy his car for $65,000 after 8 years. Should he accept Little Ricky's offer? Explain why or why not. >> ctl

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Q1 : A) Jackie just turned 16 and wants to buy a car—now! Problem is, she has no money. She does have a $6000 inheritance that she can cash in in two years, when she turns 18. She wants to borrow against that inheritance from her dad and offers to pay the entire loan back in a single payment when she turns 18. Her dad agrees to lend her the present value of the $6000 that she will pay back in two years, and he will charge a token interest rate of 1.5% a year compounded yearly. How much should dad spot Jackie to buy the car? B) You've been saving up to buy Godot Ltd. The total cost will be £10 million. You currently have about £2.3 million. If you can earn 5% on your money, how long will you have to wait?
50. If John purchases a new car for $18,500 and, according to research, itstraight line depreciates to zero value after 10 years, how much will his car beworth after 99 months? A. $0B. $3,237.50C. $186.87D. $3,150.25
Ma1. c) Your uncle has $250,000 invested at 7% and now he wants to retire. He wants to withdraw $35,000 at the end of each year, beginning at the end of this year. He also want to have $25,000 left to give you when he ceases to withdraw funds from the account. For how many years can he make the $35,000 withdraws and still have $25,000 left in the end?
(Related to The Business of Life: Saving for Your First House) (Future value) You are hoping to buy a house the future and recently received an inheritance of $18,000. You intend to use your inheritance as a down payment o your house. a. If you put your inheritance in an account that earns 8 percent interest compounded annually, how many years will be before your inheritance grows to $34,000? b. If you let your money grow for 10.25 years at 8 percent, how much will you have? c. How long will it take your money to grow to $34,000 if you move it into an account that pays 4 percent compounded annually? How long will it take your money to grow to $34,000 if you move it into an account that pays 13 percent? d. What does all this tell you about the relationship among interest rates, time, and future sums? it be before your inheritance grows to $34,000? 8.26 years (Round to one decimal place.) b. If you let your money grow for 10.25 years at 8 percent, how much will you have? (Round to the…
5. Mr. Johnson wants to buy insurance against his house burning down. The insurance will pay Mr. Johnson $500,000 if his house burns down. The probability that Mr. Johnson's house will burn down in a given year is 0.005, so the probability that it will not burn down is 0.995. The insurance premium for the policy is $2,000 per year. (a) Determine the expected return for the insurance company. (b) Because the insurance company is losing money on house insurance, a company officer asks the premium manager to determine the annual premium required for the insurance company to make $1,000 on each $500,000 policy. Determine the annual premium.
Solve on the paper onlys Q) At the end of year 5 Joe starts to withdraw $14500 from his savings account. If he takes out the same amount each year and the interest rate is 14%, what was Joe's initial investment assuming the account will be depleted at the end of year 25
Your parents agree to pay half of the purchase price of a new car when you graduate from college. You will graduate and buy the car two years from now. You have OMR9,000 to invest today and can earn 12% on invested funds. If your parents match the amount of money you have in two years, what is the maximum you can spend on the new car? Select one: O a. OMR19,250 O b.OMR15,000 O c. OMR22,579 O d.OMR 7,260 O e. OMR11,290
Brief Exercises BE6.7 (LO2) Jose Garcia's lifelong dream is to own a fishing boat to use in hisretirement. Jose has recently come into an inheritance of $400,000. He estimatesthat the boat he wants will cost $300,000 when he retires in 5 years. How much ofhis inheritance must he invest at an annual rate of 8% compounded annually) tobuy the boat at retirement? BE6.8 (LO2) Refer to the data in BE6.7. Assuming quarterly compounding of amountsinvested at 8%, how much of Jose Garcia's inheritance must be invested to haveenough at retirement to buy the boat?
Q) At the end of year 5 Joe starts to withdraw $14500 from his savings account. If he takes out the same amount each year and the interest rate is 14%, what was Joe's initial investment assuming the account will be depleted at the end of year 25 Solve on the white paper onlys.
May I ask for an explanation and solution to the question for a better understanding. Thank you! 10. You inherit P150,000 from your aunt. You decide to invest the money in a three-year certificate of Deposit (CD) that pays 4% interest, compounding quarterly, to use as a down payment on a house. How much money will you have when the CD matures? a. P506,188.80 b. P169,023.75 c. P168,729.60 d. P674,918.40
D4) Bob buys a property that costs $1,000,000. The property is projected to generate NOI as follows: Year NOI 1 $100,000 2 $105,000 3 $110,000 Bob will own the property for two years. Bob will sell the property at the end of year 2 at a cap rate that is 250 basis points lower than the cap rate at which he bought the property. What is Bob’s annualized IRR for the investment in question A. 26.21% B. 14.89% C. 30.47% D. 27.78%
Dave has inherited $7,000 from the death of Grandma Mary. He would like to use this money to buy a baking equipment costing $8,000 3 years from now. Will Dave have enough money to buy the gift if he deposits his money in an account paying 9 percent compounded semi-annually? m Nper (or N) =n*m Rate (or I/Y)=i/m PV PMT FV Answer

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