An investor purchases a small investment property for $300,000 with a $30,000 deposit. The property appreciates by 15% over 3 years of ownership. During that time the property generates an effective gross income of $7,000 in year 1,$6,000 in year 2 and $7,000 in year 3 with level operating expenses of $5,000 per year. The debt service payment is $1,500 per year. What is the cash-on-cash return for the investment?

7. An investment has a cost of $2000. The investment will have a payout of X at the end of the first year. This initial payout X will grow at the rate of 10% per year for the next 3 years, then by 6% per year for the next 2 years, and then at the rate of 4% per year for the following 1 year. You believe the riskiness of this investment is 9%.

a. Calculate the smallest X that would entice you to invest.

Equipment maintenance costs for manufacturing explosion-proof pressure switches are projected to be $100,000 in year 1 and increase by 4% each year through year 5.
What is the present worth of the maintenance costs at an interest rate of 10% per year, compounded quarterly for the first 3 years, if the interest rate for years 4 and 5 are 10%/year compounded monthly? (solve by hand DON'T use Excell program)

XYZ has been growing at a rate of 30% per year in recent years. This same supernormal growth is expected to last for another two years (30% for Year 0 to Year 1 and Year 1 to Year 2), then at a constant rate of 10% thereafter.

a. If D0 = RM1.80, rs = 12%, then what is XYZ’s stock worth today? What is the expected dividend yield and its capital gains yield at this time?

An inflation-indexed 3-year, annual 4% coupon bond issued by Thailand at par (Present Value =Par Value = 100 Thai Bhat initially). Inflation in Thailand increases by 5 % in year 1, by 4 % in year 2, and zero % in year 3. What is the coupon amount in Thai Bhat in year 2?

a. Bhat 4.20

b. Bhat 4.00

c. Bhat 5.00

d. Bhat 4.37

The spot price of an investment asset is $30 and the risk-free rate for all maturities is 10% with continuous compounding. The asset provides an income of $2 at the end of the first year and at the end of the second year. What is the three-year forward price? (Hint: First find the PV of $2 income at year 1 and year 2 using 10% rate and subtract it from spot price.)

Find the modified internal rate of return (MIRR) for the following series of future cash flows if the company is able to reinvest cash flows received from the project at an annual rate of 8.91 percent.The initial outlay is $354,000.

Year 1: $169,600

Year 2: $137,900

Year 3: $178,100

Year 4: $132,200

Year 5: $182,300

Round the answer to two decimal places in percentage form.

The spot price of an investment asset is $30 and the risk-free rate for all maturities is 10% with continuous compounding. The asset provides a dividend income of $2 at the end of the first year and at the end of the second year. What is the three-year futures price? (Hint: you would first need to find the PV of year 1 and year 2 incomes and then subtract it from  the spot price.)