50.1K

Verified Solution

Link Copied!

please answer (a)(b)(c)(d)(e)(f) step by step!

129876 29876 1987 55 2012 with a far 1198765 65 55 2011987 5320119870 5520110? 220 356. An investor is considering the followin98763 two investments. 20119876 Bonds. The investor uses 10,000,000 to buy 5-year bond 198702 201198765 55 2017 value of 5520, and a coupon rate of 4%. The bonds currently yield 6% p.a. effective in the market. 5520 Factory. The investor invests 10,000,000 in a new factory, which takes a year to build.8765 5520received in arrears, for fifteen years. However, five years after construction is finished. 8765 5320 After construction is finished, the factory will generate an income of 135,000 monthly, 8765 5520 the investor needs to upgrade the factory, requiring a further investment of 5,000,000. 8765 55201 (a) LEEDS1515 (4 marks) Compute the net present value of the bond investm5 project at an interest rate of 5% p.a. 55 201 (6) LEEDS1515 (4 marks) Compute the net pres 765 53 2012 Project at an interest rate of 5% p.a. value of the factory investment 8765 -- LEEDS1515 (5 marks) Compute 33201198 to the nearest percentage). ed 5- 55 201 (e) LEEDS1515 (5 marks) Assume that the investor understands the time value of 3765 55.2011987woney and the concept of discounting, but does not know jargon like "net present 8765n value", "payback period" or "yield. The investor asks you for advice in which 3765 project they should invest. In about five sentences, advise the investor using your results in parts (a)-(d) to 3765 332011987 compare the bond and factory investment projects. Your advice should not use a jargon that the investor does not know. LEEDS1515 (4 marks) The cross-over yield of the two investments is approxi8765 mately 12%. Suppose that the factory can be sold for some money at the end 8765. 532011987 Will the cross-over yield increase or decrease? Explain how you arrived at to do any computations to answer this 20119870 20119379 211987 1.198765 221198 221198 201198705 211987 3011987 2011907 620119870 198765 201198765 2011967 198765 tpro.8763 201198765 2011 55 1765 201190 2011 the yield oft 2011 he factory it investment p 201110) 198765 552011(0) LEEDS1515 (4 marks) Compute the payback periods. 98765 f both investment projecte 5320119870 $32011987 532011987 987 201198765 55 2011987 2011987040 201198 2011987 201198709 20119 use any 3765 S1265 201198765 33 2011 5520110? 55 2011987, answer. 55201.1987 20119870 108765 1087632011961 do not 08765 78765 2011917 108765 201198 1087652011987 Yestion.) your 3765 201198765 1987 65 201198765 108765 129876 29876 1987 55 2012 with a far 1198765 65 55 2011987 5320119870 5520110? 220 356. An investor is considering the followin98763 two investments. 20119876 Bonds. The investor uses 10,000,000 to buy 5-year bond 198702 201198765 55 2017 value of 5520, and a coupon rate of 4%. The bonds currently yield 6% p.a. effective in the market. 5520 Factory. The investor invests 10,000,000 in a new factory, which takes a year to build.8765 5520received in arrears, for fifteen years. However, five years after construction is finished. 8765 5320 After construction is finished, the factory will generate an income of 135,000 monthly, 8765 5520 the investor needs to upgrade the factory, requiring a further investment of 5,000,000. 8765 55201 (a) LEEDS1515 (4 marks) Compute the net present value of the bond investm5 project at an interest rate of 5% p.a. 55 201 (6) LEEDS1515 (4 marks) Compute the net pres 765 53 2012 Project at an interest rate of 5% p.a. value of the factory investment 8765 -- LEEDS1515 (5 marks) Compute 33201198 to the nearest percentage). ed 5- 55 201 (e) LEEDS1515 (5 marks) Assume that the investor understands the time value of 3765 55.2011987woney and the concept of discounting, but does not know jargon like "net present 8765n value", "payback period" or "yield. The investor asks you for advice in which 3765 project they should invest. In about five sentences, advise the investor using your results in parts (a)-(d) to 3765 332011987 compare the bond and factory investment projects. Your advice should not use a jargon that the investor does not know. LEEDS1515 (4 marks) The cross-over yield of the two investments is approxi8765 mately 12%. Suppose that the factory can be sold for some money at the end 8765. 532011987 Will the cross-over yield increase or decrease? Explain how you arrived at to do any computations to answer this 20119870 20119379 211987 1.198765 221198 221198 201198705 211987 3011987 2011907 620119870 198765 201198765 2011967 198765 tpro.8763 201198765 2011 55 1765 201190 2011 the yield oft 2011 he factory it investment p 201110) 198765 552011(0) LEEDS1515 (4 marks) Compute the payback periods. 98765 f both investment projecte 5320119870 $32011987 532011987 987 201198765 55 2011987 2011987040 201198 2011987 201198709 20119 use any 3765 S1265 201198765 33 2011 5520110? 55 2011987, answer. 55201.1987 20119870 108765 1087632011961 do not 08765 78765 2011917 108765 201198 1087652011987 Yestion.) your 3765 201198765 1987 65 201198765 108765

Answer & Explanation Solved by verified expert

See Answer