All our Essay orders are Original, and are written from scratch. Try us today at 30% off

A real estate property can be rented for 19000€ per year. We assume that it can last for many decades, with growing maintenance costs of 0,75% per year. For how much would you value it today if you want to obtain at least a profitability of 7% ?

Want answers to the assignment Below?

Text or Whatsapp Olivia at +1 (307) 209-4351


 

BCO126 MATHEMATICS OF FINANCE Final Task brief & rubrics

Task

General instructions:

1. Log in to your Moodle course and download the Final assignment.

2. Use a blank sheet of paper to hand-write your formulas and your workings to obtain the result for each question.

3. Include each question number and highlight each final result.

Task content:

Part I

Read the following context;

Our company has been mainly producing parts for cars with combustion engines. We are facing a challenging time. Potential shifting trends towards electric automobiles had apparently caused a reduction in our demand, that has been decreasing during the last years. In order to adapt to the future circumstances, the following different scenarios are being considered:

· Changing the production line to adapt to the electric automobile market.

· Investing in different projects to adapt to the new situation.

· Selling the company before facing severe losses.

Question 1

We were considering adapting our production line, in order to produce some parts for electric automobiles, this way, and after analyzing the possible market opportunities, we could expect to obtain net revenues of $50,000 per month for at least the next 12 years.

a) What is the maximum that we should invest on this project if we consider a cost of capital of 4%?

b) If we ask for a loan of 5,000,000 at an annual interest rate of 1% compounded quarterly, to be paid in 10 years, how much would you have to pay every quarter to cover the loan?

Question 2

There was another option on the table; a potential client has offered the possibility to sign a contract, starting in 4 years, with a duration of 8 years (so it will produce 8 payments), to purchase a specific part that we can produce, but that will require a total reconversion of the whole factory. This contract is signed for annual revenues of $800,000. To do this, we must replace the machinery and the production plant must be reconverted.

a) What is the maximum amount of money we could afford to invest if we want a profitability of at least 5%?

b) If we ask for a loan to be paid back in 5 years in constant equal monthly payments of $40,000, how much will we pay in total for the loan?

Question 3

After these previous calculations, the project still requires a big initial investment, and other options are being considered. Another project, that consists of just readjusting some parts to adapt them to assemble to electric cars, would produce net revenues of $200,000 per year, for 10 years. Assuming that these revenues will grow at a constant 1% per year, and are assessed at a cost of capital of 2,5%:

a) Would it still be profitable if it required an initial investment of $1,500,000?

b) If we take these annual revenues of $200,000 growing at a 1% per year, and we invest them in a bank account that offers an annual rate of 5% for 10 years, how much will we have at the end?

Question 4

Finally, there is a last consideration:

a) Selling the company: Considering that our plant produces annual cashflows of $260,000 decreasing at a 0,8% annual, expected to last for many years, for how much should we value the company today if investors are willing to obtain a profitability of 4%?

PART II

Question 1

After retirement, you would like to have $16,000 income each year, for at least 30 years. How much should you have saved in your retirement account to receive this income if the annual interest rate is 6 percent per year? (Assume that the payments start one year after your retirement)

Question 2

A real estate property can be rented for 19000€ per year. We assume that it can last for many decades, with growing maintenance costs of 0,75% per year. For how much would you value it today if you want to obtain at least a profitability of 7% ?

Question 3

A friend has taken a $170,000 mortgage out on his house at an interest rate of 6 percent per year. If the mortgage calls for equal payments per semester for 6 years, what is the amount of each payment?

Question 4

If you start making $170 saving contributions per month, starting at the end of this month, and continue them for 11 years, what is the future amount of money that you will receive if the annual interest rate is 3%?

Question 5

Calculate how much you should invest today in a project that will generate cash-flows of 12000€ per year, starting in 5 years, and during the following 15 years, if you want to get a profitability of 5%.

Formalities:

· Font: Arial 12,5 pts.

· Text alignment: Justified.

· The formulas and procedures to obtain the result must be included.

It assesses the following learning outcomes:

· to assess the present value of future cash flows and the future value of regular savings, annually and periodically

· to understand the perpetuity and annuity valuation and their factors – annual and periodical – and with various starting dates with and without growth

· to assess the future revenue generation of a regular savings scheme and the amount needed to be saved over time to meet a future series of payments

· to understand the process of investments appraisal and projects classification

· to determine percentage calculations and discounting

Rubrics

Rubrics

Descriptor

9-10
The student constructs a well-reasoned conclusion from accurate calculations that demonstrate an excellent understanding of the concepts.

8-8.9
The student arrives at a good conclusion with mostly accurate calculations, demonstrating a good understanding of the concepts.

7-7.9
The student makes a fair conclusion despite some inaccuracies in the calculations. The student’s understanding of the concepts is fair.

6-6.9
Several inaccuracies and incoherent or incomplete conclusion. The student demonstrates some, but insufficient understanding of the concepts.

3-5.9
Systematic inaccuracies and incoherent/incomplete or missing conclusions. The student demonstrates insufficient understanding of the concepts. They may mention some relevant ideas or concepts, although it is clear that the relationship between them is not understood by the student.

1-2.9
The student demonstrates insufficient understanding of the concepts and does not include any relevant calculations.

0
The student leaves the question blank or cheats.

Points are stated at the end of each question.
The post A real estate property can be rented for 19000€ per year. We assume that it can last for many decades, with growing maintenance costs of 0,75% per year. For how much would you value it today if you want to obtain at least a profitability of 7% ? first appeared on Assignment writing service.

  

Testimonials

Great Job

Great job! Those were you, guys, who made my coursework perfect in time according to all my requirements. I will...

Mh! not bad…

The worst part ever was to find my deadline postponed for 1 hour ! They couldn`t finish the essay within...

No Complaints So far Guys

Yeah …I really like all the discounts that they offer, the prices are very flexible. Plus they have different promotions...

Best Service

The book review I asked for is so amazing! Endless thanks to your team for completing my review and for...

Comes through every time

I have used this website for many times, and each time they found perfect writers for me and they produce...

Best

They look cool and trustworthy enough to me. I gather they made discounts as their prices are quite affordable if...

CLICK HERE  To order your paper

About Scholarfront Essay writing service

We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.

How It Works

To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.

Are there Discounts?

All new clients are eligible for upto 20% off in their first Order. Our payment method is safe and secure.

 CLICK HERE to Order Your Assignment

 

ORDER WITH 15% DISCOUNT

Let your paper be done by an expert

Custom Essay Writing Service

Our custom essay writing service has already gained a positive reputation in this business field. Understandably so, all custom papers produced by our academic writers are individually crafted from scratch and written according to all your instructions and requirements. We offer Havard, APA, MLA, or Chicago style papers in more than 70 disciplines. With our writing service, you can get quality custom essays, as well as a dissertation, a research paper, or term papers for an affordable price. Any paper will be written on time for a cheap price.

Professional Essay writing service

When professional help in completing any kind of homework is all you need, scholarfront.com is the right place to get it. We guarantee you help in all kinds of academia, including essay, coursework, research, or term paper help etc., it is no problem for us. With our cheap essay writing service, you can be sure to get credible academic aid for a reasonable price, as the name of our website suggests. For years, we have been providing online custom writing assistance to students from countries all over the world, including the United States, Canada, the United Kingdom, Australia, Italy, New Zealand, China, and Japan.