Reference no: EM132676525
Given the following information:
5 yr loan of $200 000 for a $400 000 bike shop. ($200 000 is from own investment)
60 monthly repayments needed with an amount of $3800
An annual feel of $200
The loan will be fully repaid 5 years.
The expenses of the bike shop are:
$12 000 rent at end of each quarter
$10 000 labor costs paid at the end of each month
$15 000 maintenance costs paid at the end of each half year
The predicted revenue is :
$24 000 per month
Revenue is expected to rise by 24 000(1+1.6%)
The revenue will rise each year so first year is 24 000(1+1.6%) second year is 24 000(1+1.6%)^2 and so on .
Problem 1: Calculate the effective yearly return over the 5 year period.