Investment

A) An investment opportunity requires a payment of $980 for 12 years, starting a year from today.

If your required rate of return is 5.5 percent, what is the value of the investment to you today?(Round factor values to 4 decimal places, e.g. 1.2525 and final answer to 2 decimal places, e.g. 15.25.)

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B) Robert Hobbes plans to invest $23,800 a year at the end of each year for the next seven years in an investment that will pay him a rate of return of 10.8 percent.

How much money will Robert have at the end of seven years?(Round factor values to 4 decimal places, e.g. 1.2515 and final answer to 2 decimal places, e.g. 15.25.)

A British insurance company is offering a new financial product that generates a growing stream of income in perpetuity. The motivation is that it will provide a steady, but growing, stream of income that can also be bequeathed to future generations. The product pays $ 25,000 at the end of the first year and increases by $ 5,000 each year (e.g., 25,000; 30,000; 35,000;…). If the discount rate is 6%, what would you be willing to pay for this product?

Why is the financial plan typically one of the last chapters in a business plan? Briefly describe the three pro forma financial statements that should be included in a business plan

 

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