Question

Yellow Sand Aviation just bought a new trampoline park. To pay for the trampoline park, the company took out a loan that requires Yellow Sand Aviation to pay the bank a special payment of 5,070 dollars in 4 month(s) and also pay the bank regular payments. The first regular payment is expected to be 1,310 dollars in 1 month and all subsequent regular payments are expected to increase by 0.42 percent per month forever. The interest rate on the loan is 1.62 percent per month. What was the price of the trampoline park?

Answer #1

Solution

Price of trampolin park= Present value of special payment(5070 dollars)+Present value of perpetuity payment

Present value of special payment=Special payment/(1+r)^n

r=discount rate/period=1.62%

n=number of periods=4

Present value of special payment=5070/(1+.0162)^4=4754.35052

Present value of perpetuity payment=Payment made in first month/(r-g)

where first month payment=1310

g=growth rate per period=.42%

r=discounting rate per period=1.62%

Present value of perpetuity payment=1310/(.0162-.0042)

=109166.6667

Thus Price of trampolin park=109166.6667+4754.35052

=113921.0172

**If you are satisfied with the answer,please give a
thumbs up**

Green Forest Packaging just bought a new medical clinic. To pay
for the medical clinic, the company took out a loan that requires
Green Forest Packaging to pay the bank a special payment of 19,790
dollars in 5 month(s) and also pay the bank regular payments.
The first regular payment is expected to be 4,070
dollars in 1 month and all subsequent regular payments are expected
to increase by 0.32 percent per month forever. The interest rate on
the loan...

Silver Sun Consulting just bought a new apple orchard for
695,611 dollars. To pay for the apple orchard, the company took out
a loan that requires Silver Sun Consulting to pay the bank a
special payment of 21,660 dollars in 6 months and also make regular
monthly payments forever. The first regular payment is expected in
1 month and all subsequent regular payments are expected to
increase by 0.34 percent per month forever. The interest rate on
the loan is...

Oxygen Optimization just bought a new filtration system for
167,300 dollars. To pay for the filtration system, the company took
out a loan that requires Oxygen Optimization to pay the bank a
special payment of 101,000 dollars in 5 year(s) and also make
regular annual payments forever. The first regular payment is
expected in 1 year and is expected to be 1,800 dollars. All
subsequent regular payments are expected to increase by a constant
rate each year forever. The interest...

Yellow Sand Shipping is evaluating a 1-year project that would
involve an initial investment in equipment of 24,100 dollars and an
expected cash flow of 27,000 dollars in 1 year. The project has a
cost of capital of 10.23 percent and an internal rate of return of
12.03 percent. If Yellow Sand Shipping were to use 24,100 dollars
in cash from its bank account to purchase the equipment, the net
present value of the project would be 395 dollars. However,...

Hi please can you check my work and show me the right answers
and how you get to the answers? thank you
Question1
Penny bought a new truck today from Middlefield Motors. She will
receive a cash rebate of 5,000 dollars from Middlefield Motors
today, pay 16,400 dollars to Middlefield Motors in 3 year(s),
receive a cash rebate of 6,400 dollars from Middlefield Motors in 4
year(s), and pay 16,200 dollars to Middlefield Motors in 7 year(s).
If the discount...

Sang just took out a loan from the bank for 67,668 dollars. He
plans to repay this loan by making a special payment to the bank of
29,855 dollars in 2 months and by also making equal, regular
monthly payments of X. If the interest rate on the loan is 1.35
percent per month, he makes his first regular monthly payment later
today, and he makes his last regular monthly payment made in 4
months from today, then what is...

Youssef just took out a loan from the bank for 78,090 dollars.
He plans to repay this loan by making a special payment to the bank
of 19,680 dollars in 2 months and by also making equal, regular
monthly payments of X. If the interest rate on the loan is 0.63
percent per month, he makes his first regular monthly payment later
today, and he makes his last regular monthly payment made in 4
months from today, then what is...

1) Jens just took out a loan from the bank for 79,702 dollars.
He plans to repay this loan by making a special payment to the bank
of 4,130 dollars in 4 years and by also making equal, regular
annual payments of X for 8 years. If the interest rate on the loan
is 12.57 percent per year and he makes his first regular annual
payment in 1 year, then what is X, Jens’s regular annual
payment?
2) Theo just...

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...

14. You own two investments, A and B, that have a combined total
value of 63,418 dollars. Investment A is expected to make its next
payment in 1 month. A’s next payment is expected to be 266 dollars
and subsequent payments are expected to grow by 0.78 percent per
month forever. The expected return for investment A is 1.25 percent
per month. Investment B is expected to pay 219 dollars each quarter
forever and the next payment is expected in...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 2 minutes ago

asked 5 minutes ago

asked 6 minutes ago

asked 8 minutes ago

asked 8 minutes ago

asked 10 minutes ago

asked 11 minutes ago

asked 11 minutes ago

asked 12 minutes ago

asked 16 minutes ago

asked 16 minutes ago

asked 16 minutes ago