How much interest will you end up paying over life of loan

Assignment Help Financial Management

Reference no: EM131444339

1) Suppose you own two assets with the following payouts. (1) $550 at the end of every year starting 1 year from now. The annual cost of capital for these cash flows is 9%. (2) $350 one year from now and a cash flow that is 2% larger than the prior cash flow every year thereafter. The annual cost of capital for these cash flows is 7%. What is the weighted average cost of capital of this two asset portfolio? (enter your answer as a percent, e.g. 2.51. Do not include the "%" sign).

2) Suppose that you take out a loan for $300000 to purchase a house. You are required to make monthly payments, and the APR is 6%. How much interest will you end up paying over the life of the loan (30 year mortgage)?

3) Suppose that you are evaluating the following investment opportunity. At the end of the the next five years you estimate that you will receive the following cash flows, $250, $700, $400, $850, and $800. At the end of every year following year five you will receive a cash flow that is 3% larger than the prior cash flow. If the cost of capital is 10% how much should you be willing to invest in this opportunity?

Reference no: EM131444339

Questions Cloud

Projected increase in retained earnings for next year : This firm is expecting sales to decrease by 3 percent next year while the profit margin remains constant. The firm wants to increase the dividend payout ratio by 2.5 percent. What is the projected increase in retained earnings for next year?

Investment banking firm of dewey and cheatum : You’ve just joined the investment banking firm of Dewey, Cheatum, and Howe. They’ve offered you two different salary arrangements. You can have $84,000 per year for the next two years, or you can have $73,000 per year for the next two years, along wi..

How might both parties gain from a lease transaction : Is leasing a zero-sum game in the sense that any gain to the lessee is a cost to the lessor?If not, how might both parties gain from a lease transaction? In your answer, explain how the lessee and the lessor analyze the situation, why they might use ..

Assume that all dividends declared actually paid : Electronics World Inc.paid out $22.4 million in total common dividends and reported $144.7 million of retained earnings at year-end. The prior year's retained earnings were $95.5million. What was the net income? Assume that all dividends declared act..

How much interest will you end up paying over life of loan : Suppose that you take out a loan for $300000 to purchase a house. You are required to make monthly payments, and the APR is 6%. How much interest will you end up paying over the life of the loan (30 year mortgage)?

Save money to meet three objectives : Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $27,000 per month for 25 years, with the first payment received 30 years and 1 month from now. He can af..

What is the duration of a four-year treasury bond : What is the duration of a four-year Treasury bond with a 9.5 percent semiannual coupon selling at par? What is the duration of a three-year Treasury bond with a 9.5 percent semiannual coupon selling at par?

Dso and accounts receivable : DSO AND ACCOUNTS RECEIVABLE Ingraham Inc. currently has $810,000 in accounts receivable, and its days sales outstanding (DSO) is 60 days. It wants to reduce its DSO to 30 days by pressuring more of its customers to pay their bills on time.

The loan reauires monthly repayment : Steven went to college on a student loan of $80,000 at 12%. The loan reauires monthly repayment over 5 years upon graduation. Upon his graduation 2 years ago, Steven started to pay it off. Steven is now considering paying it off once and for all. How..

User Account

All Pages