Reference no: EM133056968

1. Southern California Publishing Company is trying to decide whether or not to revise its popular textbook, financial psychoanalysis made simple. The company has estimated that the revision will cost $90,000. Cash flows from increased sales will be $21,400 the first year. These cash flows will increase by 5 percent per year. The book will go out of print six years from now. Assume that the initial cost is paid now and revenues are received at the end of each year.

If the company requires a return of 12 percent for such an investment, what is the value today of the cash flows? ( Do not round intermediate calculations and round your answer to 2 decimal places e.g.,32.16.)

Present value

2. Should the company undertake the revision yes or no

3. You are planning to save for retirement over the next 35 years. To do this, you will invest $870 per month in a stock account and $470 per month in a bond account. The return of the stock account is expected to be an APR of 10.7 percent, and the bond account will earn an APR of 6.7 percent. When you retire, you will combine your money into an account with an APR of 7.7 percent. All interest rates are compounded monthly.

How much can you withdraw each month from your account assuming a withdrawal period of 30 years? (Do not round intermediate calculations and round your answer to 2 decimal places e.g.,32.16.) withdrawal $ per month

4. You receive a credit card application from shady banks savings and loan offering an introductory rate of 2.2 percent per year compounded monthly for the first six months , increasing thereafter to 17 percent compounded monthly assuming you transfer the $7,200 balance from your existing credit card and make no subsequent payments, how much interest will you owe at the end of the first year (Do not round intermediate calculations and round your answer to 2 decimal places e.g.,32.16.)
Interest accrued $

5. You're trying to choose between two different investments both of which have up front costs of $68,000. Investment G returns $128,000 in six years. Investment H returns $188,000 in 10 years

Calculate the annual return for investment G and H

Annual return
Investment G %
Investment H %

6. Suppose an investment offers to quadruple your money in 42 months ( Dont Believe it). What rate of return per quarter are you being offered? (Do not round intermediate calculations and round your answer to 2 decimal places e.g.,32.16.)

Quarterly rate of return %