2) Please solve for each of the following problems: A) Henley Production Corp. estimates that it...

 

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2) Please solve for each of the following problems: A) Henley Production Corp. estimates that it needs $5,250,000.00 to replace one of its factories in 25 years. The company is quoted a rate of 7 1/2% per year as the typical investment return for similar projects over this time frame. How much must be invested by Henley Production today to secure adequate funding for this factory? (8 points). B) If Henley were provided with an alternate form of financing where $1,900,000.00 must be paid after year 1, $1,700,000,000 would have to be paid after year 15 and the remaining $1,650,000.00 was required at the time of construction, 25 years from now, how much will the total value of this investment be today? When Compared with the previous alternative, which terms are more attractive to Henley Production and why? (12 points). C) Jenny Thomas holds an annuity that is paying her a total of $2,500.00 per year over a period of 18 years. If the interest rate payable on this annuity is 6 1/4%, what is the value of this annuity? (10 points). 2) Please solve for each of the following problems: A) Henley Production Corp. estimates that it needs $5,250,000.00 to replace one of its factories in 25 years. The company is quoted a rate of 7 1/2% per year as the typical investment return for similar projects over this time frame. How much must be invested by Henley Production today to secure adequate funding for this factory? (8 points). B) If Henley were provided with an alternate form of financing where $1,900,000.00 must be paid after year 1, $1,700,000,000 would have to be paid after year 15 and the remaining $1,650,000.00 was required at the time of construction, 25 years from now, how much will the total value of this investment be today? When Compared with the previous alternative, which terms are more attractive to Henley Production and why? (12 points). C) Jenny Thomas holds an annuity that is paying her a total of $2,500.00 per year over a period of 18 years. If the interest rate payable on this annuity is 6 1/4%, what is the value of this annuity? (10 points).

Answer rating: 100% (QA)

A To find the present value PV of the future cost of replacing the factory we can use the formula fo... View the full answer