1. Rafael Muoz, a physical education teacher, invests $90,000.00 in the purchase of a plot of land,...

1. Rafael Muñoz, a physical education teacher, invests $90,000.00 in the purchase of a plot of land, hoping that its value will increase 14% each year for the next 5 years. After this term, she will take the funds to receive an annuity for 10 years. Assuming the annuity earns an interest rate of 14%, what will be the amount of it?

2. A project that delivers annual cash flows of $28,500 for nine years costs $138,000 today. Is this a good project if the required return is 8%? Is it good if the yield is 20%? At what discount rate would it be the same to accept or reject the project?

Answer rating: 100% (QA)

Lets tackle each question 1 To find the future value of the investment in the plot of land after 5 y... View the full answer