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. You are considering purchasing land for investment. The current landowner is willing sell you...

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Accounting

.

You are considering purchasing land for investment. The current landowner is willing sell you the land in exchange for a $70,000 note payable over 12 years. The landowner would require a payment of $9,289 at the end of each year for 12 years. Calculate the annual interest rate on this loan. (hint: this is an internal rate of return problem)

Interest rate:___________________

You are considering purchasing 100 shares of stock in Big Money Company. You expect the stock to pay annual dividends of $970 at the end of each year, and to be worth $85,000 at the end of ten years, when you plan to sell the stock. The investment costs $43,000 and you need an annual return of 7.3%. What is the net present value of this investment? Note: This is a standard net present value problem.

Cash Flow Worksheet

Present Value

Net Present Value

Based on your calculations, will the total return on the investment be at least 7.3%?

Circle one: Yes No

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