Calculate charles net return

Assignment Help Accounting Basics
Reference no: EM131627602

Question: Charles Cook, an investor, is considering two financing plans for purchasing a parcel of real estate costing $50,000. Alternative X involves paying cash; alternative Y involves obtaining 80% financing at 10.5% interest. If the parcel of real estate appreciates in value by $7,500 in 1 year, calculate

(a) Charles's net return and

(b) his return on equity for each alternative.

If the value dropped by $7,500, what effect would this have on your answers to parts a and b?

Reference no: EM131627602

Questions Cloud

What are the five porter forces : What are the five porter forces? Explain how each affect strategy.
What is the current bond price : If the YTM on these bonds is 4 percent, what is the current bond price?
Find the temperature in degrees fahrenheit : The expression 9/5 C+32 where C stands for temperature in degrees Celsius. If the temperature is 45 degrees Celsius, find the temperature in degrees Fahrenheit.
What does it mean when cash used : What does it mean when cash used for investing activities is greater than cash generated from operating activities?
Calculate charles net return : Charles Cook, an investor, is considering two financing plans for purchasing a parcel of real estate costing $50,000. Alternative X involves paying cash.
Differ from strategic analysis at the business unit level : How does strategic analysis at the corporate level differ from strategic analysis at the business unit level?
What is bad boys cost of capital : If Bad Boys Inc raises capital using 45% debt, 5% preferred stock, and 50% common stock, what is Bad Boys cost of capital?
Multitude of internal and external environmental factors : As open systems, organisations impact on and are impacted upon by a multitude of internal and external environmental factors.
Discuss the risks associate with the given investment : Choose and justify your choice of the best of these alternative investments in gold. Discuss the risks you associate with this investment.

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd