Question

A skating rink is expected to produce regular annual cash flows of 18,787 dollars with the first regular cash flow expected later today and the last regular cash flow expected in 8 years from today. In addition to the regular cash flows of 18,787 dollars, the skating rink is also expected to produce an extra cash flow of 63,836 dollars in 9 years from today. The cost of capital for the skating rink is 5.79 percent. What is the value of the skating rink?

Sasha has an investment worth 33,123 dollars. The investment will make a special payment of X to Sasha in 6 years from today. The investment also will make regular, fixed annual payments of 5,900 dollars to Sasha with the first of these payments made to Sasha later today and the last of these annual payments made to Sasha in 7 years from today. The expected return for the investment is 12.24 percent per year. What is X, the amount of the special payment that will be made to Sasha in 6 years?

Jens just took out a loan from the bank for 161,202 dollars. He plans to repay this loan by making a special payment to the bank of 6,330 dollars in 2 years and by also making equal, regular annual payments of X for 10 years. If the interest rate on the loan is 4.66 percent per year and he makes his first regular annual payment in 1 year, then what is X, Jens’s regular annual payment?

Jabari just took out a loan from the bank for 135,278 dollars. He plans to repay this loan by making a special payment to the bank of 13,602 dollars in 3 months and by also making equal, regular monthly payments of X. If the interest rate on the loan is 0.55 percent per month, he makes his first regular monthly payment later today, and he makes his last regular monthly payment made in 5 months from today, then what is X, the amount of the regular monthly payment?

Answer 1

(1) Fixed Annual Cash Flows = $ 18787, Number of Cash Flows = One immediately, followed by one each at the end of each year upto the end of year 8 = 1+8 = 9, Cost of Capital = 5.79 % and One-Time Cash Flow = $ 63836 and Time of One-Time Cash FLow = Year 9

Value of Skating Rink = Total Present Value of all Cash Flows generated by the skating rink = 18787 + 18787 x (1/0.0579) x [1-{1/(1.0579)^(8)}] + [63836/(1.0579)^(9)] = 136426.23 + 38464.86 = $ 174891.09

NOTE: Please raise separate qeuries for solutions to the remaining unrelated questions, as one query is limited to the solution of only one complete question (with a maximum of four sub-parts)