Reference no: EM133111687

Questions -

Q1. Your brother owns a commercial electrical company. A friend of his is retiring and has offered to sell her electrical maintenance contracts to him. She has given you her speadsheets and you have estimated that you would earn a cash flow of $2,050 per month after expenses. Your financial advisor has estimated that you may be able to sell the company for $481,210 in 4 years. Based on the risk of this investment, you require a return of 8.96%. What is the most you should be willing to pay for the contracts today?

Q2. You are savings up to start your own real-estate investment company. You would like to have $35,271 in 13 years. If the rate is 8.01%, how much do you have to invest each month?

Q3. You have accumulated $1,154.25 in credit card debt. Your interest rate is 18% per year and you will pay it off in 55 months. What will be your monthly payment?

Q4. You were given a savings bond which you can redeem for $1000 in 5 years. If the interest rate is 1.65, how much is it worth today?

Q5. A company has an opportunity to invest in a project which will earn $11,865 in the year1, $12,818 in the year 2 and $18,660 in year 3. If their investor's required return is 8.69%, what is the most the company should pay for the project? (In other words, how much is the project worth today?)

Q6. You are looking at an investment that will pay you $27,787 in year 2, $41,943 in year 4 and $48,920 in year 6. If your required return is 9.23%, what is the most you should pay for the investment? (In other words, how much is the project worth today?)

Q7. You are looking at an investment that will pay you $29,646 in year 2, $42,462 in year 4 and $45,528 in year 6. If your required return is 8.2%, what is the most you should pay for the investment? (In other words, how much is the project worth today?)

Q8. You are selling some furniture and your friend has offered to give you $475 in the one year and $916 in the 3 years. If the relevant return is 6.41%, what is today's value of your friends offer?

Q9. You have been offered a consulting contract. The company has offered to pay you $8,662 today, $10,497 in year 1 and $18,207 in year 2. If the relevant return is 5.7%, how much is the contract worth today?

Q10. You just collected your school refund check of $886. You will invest it at an interest rate of 10.78%. How many years will it take to triple your money?

Q11. A corporation invested in a property for $920,445 today. The value of the property is likely to grow at a rate of 11.4% per year, on average. How long until the value of the property grows to $1,778,944?