Question 8: 1. Your brother-in-law has discovered another lost gold mine in the Arizona desert. To help fund his expedition, he wants you to give him $15,000 today (to), and another $10,000 at the end of the first year (t₁). You must then contribute $8,000/year for periods tą - ts- He'll then give you $100,000 in Year 6 (ts) when the gold is recovered. Use a discount rate of 13%. What is the NPV and IRR of this proposal? What does the IRR tell you and do you trust it? Why or why not? Why do you think the discount rate is so high? Please draw a number line for this project.
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- Answer ASAP correctly with proper explanation Samuel has just acquired a copper mine. The mine will produce $10,000 worth of ore after one year of operation. However, as the ore closest to the surface is removed, it will become more difficult to extract the ore. Therefore, the value of the ore that the mine produces will decline at a rate of 8% per year forever. If the appropriate interest rate is 6%, what is the present value of this mining operation’s future cashflows today? Show your work. Draw a timelineWeston Inc. just agreed to pay $10,000 today, $15,000 at the end of the year, and $25,000 at the end of the next year to a landowner to explore for, but not extract, valuable minerals. If the landowner invests the money at a rate of 10% compounded annually, what is the investment worth two years from today?What is the payback period on Popeye's purchase of a new pleasure boat for his tourist business? The expected cash flows appear below. (note: payback is in years; round to 2 decimals)Year 0 cash flow = -9,100,000Year 1 cash flow = 2,200,000Year 2 cash flow = 3,900,000Year 3 cash flow = 3,100,000Year 4 cash flow = 2,200,000Year 5 cash flow = 4,400,000Year 6 cash flow = 3,900,000
- Please Fill out all the tables for both questions. Do 7-1a and 7-5 tables. Thanks 7-1a A mining firm makes annual deposits of $400,000 into a reclamation fund for 25 years. If the firm must have $17 million when the mine is closed, what interest rate must the investment earn? 7-1a PV = FV D NPER = PMT RATE =| A woman went to the Beneficial Loan Company and borrowed $10,000. She must pay $323.53 at the end of each month for the next 60 months. What is the monthly interest rate she is paying? What effective annual interest rate is she paying? 7-5 monthly rate = nominal rate = 7-5 PV FV = NPER = effective rate = PMT = RATE =Question #4 You own a house on a plot of land. The land has a value of $150,000. Use of the house has a value to you. You believe that the first years benefit to you amounts to $8000. Assume that this is as though you get $8000 at the end of the first year. Thereafter the annual benefits diminish at 4% per year. Furthermore, assume that the house will have to be demolished in exactly 22 years. Assume that rates are 8% p.a. Assume the land value remains unchanged over time. a. What is the total value of the house and land? b. You enter into a contract to sell the house. The purchaser will take possession in exactly 6 years. The purchaser uses the same method of valuation as you have. However, you want payment today. What amount will the purchaser be willing to give you today?7. You plan to save every year and accumulate $150,000 in 6 years to make the down payment for your house. To achieve your financial goal, you plan to make a deposit of $20,000 per year into a bank account paying 6% annual interest. The first deposit will be made a year from today. a. Draw a timeline to visualize the problem. b. Can you achieve your financial goal? (Show your work to answer this question) c. If not, what is the minimum deposit you need to make per year in order to achive your goal? 8. You are pursuing a Bachelor's in Finance at a business school, and you will need $20,000 per year for the next 4 years to cover your college expenses. That is, you plan to withdraw $20,000 at the end each of the next 4 years, starting one year from today. To support your college education, your parents decide to make a deposit today into a bank account paying an 8% annual interest. This deposit should be sufficient to cover the four $20,000 withdrawals you will make over the next 4 years.…
- 18 Bruce is considering the purchase of a restaurant named Hard Rock Hollywood. With the help of his accountant, Bruce projects the net cash flows (cash inflows less cash outflows) from the restaurant to be the following amounts over the next 10 years: Years 1 to 6 7 8 9 10 Amount $80,000 (each year) 90,000 100,000 110,000 120,000 Bruce expects to sell the restaurant after 10 years for an estimated $1,100,000. (EV of $1. PV of $1. FVA of $1. and PVA of $1) (Use tables, Excel, or a financial calculator. Round your answer to 2 decimal places.) Required: 1-a. Calculate the total present value of the net cash flows if Bruce wants to make at least 10% annually on his investment. (Assume all cash flows occur at the end of each year. Be sure to include the selling price in your calculation.) 1-b. Assuming the restaurant is listed for sale at $1,050,000, should he purchase the restaurant? Complete this question by entering your answers in the tabs below. Reg 1A Req 18 Calculate the total…H2. .  Time remaining: 00:09:29 Finance You own a coal mining company and are considering opening a new mine. The mine itself will cost $120 million to open. If this money is spent immediately, the mine will generate $22 million for the next 10 years. After that, the coal will run out and the site must be cleaned and maintained at environmental standards. The cleaning and maintenance are expected to cost $1.8 million per year in perpetuity. What does the IRR rule say about whether you should accept this opportunity? (Hint: Consider the number of sign changes in the cash flows.) If the cost of capital is 7.6%, what does the NPV rule say? Question content area bottom Part 1) What does the IRR rule say about whether you should accept this opportunity? (Select the best choice below.) A. Accept the opportunity because the IRR is greater than the cost of capital. B. There are two IRRs, so you cannot use the IRR as a criterion for accepting the opportunity. C. Reject…The L-S Mining Company is planning to open a new strip mine in western Pennsylvania. The net investment required to open the mine is $9 million. Net cash flows are expected to be +$17 million at the end of year 1 and +$11 million at the end of year 2. At the end of year 3, L-S will have a net cash outflow of $21 million to cover the cost of closing the mine and reclaiming the land. Use Table II to answer the questions. Calculate the net present value of the strip mine if the cost of capital is 3, 9, 11, 77, 87, and 92 percent. Enter your answers in millions. For example, an answer of $1.20 million should be entered as 1.20, not 1,200,000. Round your answers to two decimal places. k NPV 3% $ million 9% $ million 11% $ million 77% $ million 87% $ million 92% $ million What is unique about this project? The NPV is negative at discount rates between % and %, positive from % to % and negative beyond %. Should the project be accepted if L-S's cost of…
- QUESTION 2 You project that you will be able to invest $1500 this year, $2000 one year from now, and $2500 two years from today You hope to use the accumulated funds six years from now to use as a $10,000 down payment on a house. Will you achieve your objectives, if the investments earn 8% compounded semiannually? A detailed timeline is required for this question. a) How much will you have in 6 years? b) Did you meet your goal? yes or no a) S b)IMPORTANT: PLEASE SAVE ALL YOUR HAND CALCULATIONS IN A FILE SO THAT YOU CAN SUBMIT THEM IF REQUIRED BY THE LECTURER. You are considering investing RM62000 in new equipment. You estimate that the net cash flows will be RM11000 during the first year, but will increase by RM2500 per year the next year and each year thereafter. The equipment is estimated to have a 8-year service life and a net salvage value of RM5200 at that time. Assume MARR of 7%. a Calculate the annual capital cost CR (ownership cost) for the equipment. b.Determine the equivalent annual revenue. c.Is this a wise investment? Y/N. Submit Format: 7882 Format: 36630 Format: A. A person wants to buy a piece of land after 12 years. The current price of the land is $300,000. Inflation rate is 4%. He wants to save by making semiannual deposits at an interest rate of 14%. Compute the amount of the payments. During the 12 years, he withdrew $3,000 end of year three, $5,000 end of year seven, and he deposited $11,000 end of year nine. Compute the last two payments