Question

a-You have made an investment of $140,000 this year (now). It is expected that you start to generate revenue of $20,000 per year from year three to year ten. Then, the revenue will start to decrease by 10% per year thereafter for the next five years. Assume that the rate of return is 10%. What is the relationship for the present value?

b-You have made an investment of $140,000 this year (now). It is expected that you start to generate revenue of $20,000 per year from year three to year ten. Then, the revenue will start to decrease by 10% per year thereafter for the next five years. Assume that the rate of return is 10%. Calculate the present value.

c-You have made an investment of $140,000 this year (now). It is expected that you start to generate revenue of $20,000 per year from year three to year ten. Then, the revenue will start to decrease by 10% per year thereafter for the next five years. Assume that the rate of return is 10%. From the calculated present value, we know that this investment generates loses. What is the minimum initial revenue that should be attained to break even?

d-You have made an investment of $140,000 this year (now). It is expected that you start to generate revenue of $20,000 per year from year three to year ten. Then, the revenue will start to decrease by 10% per year thereafter for the next five years. Assume that the rate of return is 10%. From the calculated present value, what is the relationship for the future value?

Answer 1

A. As present value of an investment comes to $114478 and the investment is $140000 which means that it will generate the negative returns in the future within the 15 years of time period. The calculation is shown in the attachment.

B. The present value of the investment is $114478 and The net present value of the investment of $140000 is -$25522. The calculation is shown in the attachment.

C. As there is a present value which comes less than the investment value in 15 years of time period the minimum initial revenue must be $140000 (present value of future cashflow) so that it will reach to the break even point. That $140000 amount as I mention must be come after deducting the future cashflow with the discouning rate of return of 10%.

D. The present value is $114478. The relationship for the future value is also negative because it is generating negative return at the 10% rate of return.

Tuesday A Relectionship with prescent Valuo find out can be as under Year Cashflow Pufacter 10% Preseed labe 12 - 20000 0.15 00015020 20000 0.683 Joods 13660 20000 0.621 000012420 2oooo 8r0.564 donos 11280 20000 SUO. 573 son10260 20000 Joy 0.467 9340 20000 co 424 XL 80 do 20000 028 0.386 CooR 7720 U 18000 NE 0.358 6300 18000 dos.0.319 Goog S742 18000 0.290 P5220 18000 pot 0.263 von 4734 - 15 & 18000 0.239 0.239 4302 - PV = 114478 I As Present Value Comes to $ 114478 and the trvestment is $ 140000 meems that It will generate negative return in the future suetoo ead

of B) Year Calalution Cashflow Present Value PV feeter lox Presect Value 10 20000 0220000 20000 120000 20000 20OOD 20000 20000 18000 0.751 0.683 0.621 10.566 0.513 O. 467 0.426 10.386 0.350 0.319 0.296 9 15020 00013660 (2420 11280 10260 9340 8480 7720 6300 5742 oo 5220 doo 4234 00 4302 $ 11 4478 18000 51419000 15 F 18000 0.263 0.239 The present Vale of the inveel meelt is $ 114678 and the Met Preseul value of the investment is - $25522