Company have to wait before expanding its operations

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1. Meadow Brook Manor would like to buy some additional land and build a new assisted living center. The anticipated total cost is $20.5 million. The CEO of the firm is quite conservative and will only do this when the company has sufficient funds to pay cash for the entire construction project. Management has decided to save $1.2 million a quarter for this purpose. The firm earns 6.25 percent, compounded quarterly, on the funds it saves. How many years does the company have to wait before expanding its operations?

2 The Wine Press is considering a project which has an initial cash requirement of $180,000. The project will yield cash flows of $2,800 monthly for 7 years. What is the rate of return on this project? (Hint: You need to present the annual rate of return.)

Reference no: EM131567427

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