Entries by Hannah Wangui

rate of return

Question 1-At a growth (interest) rate of 6 percent annually, how long will it take for a sum to double? To triple? (Do not round intermediate calculations. Round your final answers to 2 decimal places.) Time needed to double____years Time needed to triple_____years 2- Annuity payments are assumed to come at the end of each […]

 

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If you insulate your office for $23,000

Question If you insulate your office for $23,000, you will save $2,300 a year in heating expenses. These savings will last forever. a. What is the NPV of the investment when the cost of capital is 8%? 10%? b. What is the IRR of the investment? (Enter your answer as a whole percent.) c. What is the payback period […]

 

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Discount Rate

Question A new computer system will require an initial outlay of $19,500, but it will increase the firm’s cash flows by $3,900 a year for each of the next 6 years. a. Calculate the NPV and decide if the system is worth installing if the required rate of return is 8%. (Negative amount should be indicated by a […]

 

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loan

Question a. If you borrow $2,000 and agree to repay the loan in six equal annual payments at an interest rate of 11%, what will your payment be?(Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What will your payment be if you make the first payment on the loan immediately instead of […]

 

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