Compute the rate of return of this investment

Assignment Help Financial Management
Reference no: EM131906797

You purchased a building five years ago for $150,000. Its annual maintenance expense has been $5,000 per year and $1,790 per year on roof repairs. At the end of five years (now), you sell the building for $120,000. During the period of ownership, you rented out the building for $10,000 per year. If your MARR is 8% per year,

a)       Compute the Rate of Return of this investment?

b)       What is the excess, using annual worth method, of the investment?

c)        What is the Net Future Worth of the investment?

d)       What is the payback period?

e)       Was it a good investment? Justify your conclusion on the acceptability of this investment?

Reference no: EM131906797

Questions Cloud

Write first paper on what you watched : Instructions: Write one page, first paragraph write what you watched and second paragraph write your thoughts.
What is the inflation free interest rate : he bank is paying 23.27% compounded annually. The inflation is expected to be 11.36% per year. What is the inflation free interest rate?
Describe type of stains and their uses in microbiology : Describe types of media used in microbiology and how they are prepared. Describe type of stains and their uses in microbiology.
Determination of optimal level of debt firm should carry : Discuss the factors that go into the determination of the “optimal” level of debt a firm should carry.
Compute the rate of return of this investment : Compute the Rate of Return of this investment? What is the Net Future Worth of the investment? What is the payback period?
What is the market interest rate : What is the inflation rate? What is the market interest rate?
Reflection about the movie el presidente : Reflection about the movie El Presidente, the question is - Do you agree with the creators of the movie in their depiction of Emilio Aguinaldo
How as a community health nurse you help to prevent them : How as a community health nurse you help to prevent them applying the levels of prevention (primary, secondary, tertiary) give examples.
Complete form with detailing advice on how to incorporate : Use the following information for JKEB Corporation to complete 2017 Form 1120. Submit the completed form, along with your paper detailing your advice.

Reviews

Write a Review

Financial Management Questions & Answers

  Detail both the pros and cons of the strategy

With a short term interest rates near 0 percent in early 2014, suppose the treasury decided to replace maturing notes and bonds by issuing new treasury bills, thus shortening the average maturity of US debt outstanding. Discuss in detail both the pro..

  Maintenance and operations costs for a piece of equipment

The maintenance and operations costs for a piece of equipment are estimated to be $700 the first month and increase by $20 per month over the equipment's 3 year life. For budgeting purposes, the owner wants to set aside a uniform amount each month to..

  What is the risk premium assessed for this opportunity

An investor considering an opportunity that promises to provide 12% returns. They have obtained an estimate of their risk free rate, which is 3%. What is the risk premium assessed for this opportunity? What does the risk premium mean in this example?

  Calculate current share price

If the expected return on ABC's common shares is 18.5 percent, calculate the current share price.

  What is their operating cash flow

During 2014, Koneko Cat Cafe had revenue of $130,000. Koneko had $40,000 worth of fixed costs and $30,000 worth of variable costs. Depreciation was $10,000. In addition the cafe had an interest expense of $12,000 and an average tax rate of 25%. What ..

  What is reorder point-reorder point should be integer value

Cool Gelato uses various sizes of foam cups. The use of 8oz foam cups is pretty steady throughout the year, and Cool Gelato expects to use a total of 35,000 units of 8oz cups in 2017.  What is the economic order quantity for the 8oz foam cups? The EO..

  Correspond to a wide frequency distribution

Which of the following correspond to a wide frequency distribution?

  Cash-equivalent ebit

RosenBall, ASA expects a cash-equivalent EBIT of 200 million without any growth in foreseeable future. what is currently the all-equity value of RosenBall, ASA?

  What is the annual dividend yield

The stock of Pills Berry Company is currently selling at $85 per share. The firm pays a dividend of $3.25 per share. What is the annual dividend yield?

  Higher proportion of current liabilities

Company A has a current ratio of 3.0, Company B has a current ratio of 3.5, and Company C has a current ratio of 1.1. Which company has the higher proportion (not total) of current liabilities?

  Perform a complete bond refunding analysis

Perform a complete bond refunding analysis. What is the bond refunding's NPV?

  Effective annual cost of costly trade credit

If Rubash Corporation bought on terms of 1/10, net 30, what would be its nominal annual cost of costly trade credit? Assume a 365-day year. If Rubash were unable to stretch its trade credit and hence had to pay by Day 30 if it did not take discounts,..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd