gibbss80stu
08.11.2019 •
Business
One year ago, you paid $15,000 for an empty plot of land. today, you are considering developing it into a parking lot. it will cost you $50,000 today to turn this land into a parking lot. as a parking lot, you anticipate that it will generate $8,000 in revenue each year forever, starting one year from today. the required return for this project is 14% annually. assume that you have no other ideas for what to do with this land; if you don’t build the parking lot, it will not be used for anything else. also assume you will never sell this land. from a financial perspective, is turning this land into a parking lot today a good idea?
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Ответ:
Yes, it will be financially advantageous to convert the land into parking lot
Explanation:
F0 = 50,000 dollars
cash flow: 8,000 at perpetuity
present value of a perpetuity:
8,000 / 0.14 = 57,142.8571
57,124.86 - 50,000 = 7,124.86
As the value of the investment exceeds the cost it is a good idea to convert the land into parking lot.
Ответ:
To find the rate of change you find the difference in each of the numbers on the graph. For example, 36-32 is 4. So 28-4 is 24 and that would be the next number down. It would also match x to be 0 because since the rate of change for x was 5, if you subtract 5 from 5 you get 0. So from this we know that the coordinates would be 0,5.
From this info, the slope would be 4/5 and the y intercept or initial value would be 24