I need help with question 28-31.

BI U - - - A.E E Merge & Center - $ -% % -28 Conditional Fo Formatting Font Alignment Number Sty X fx KILMIN D ME 7382 Homework Assignment #2 28 Consider an asset which is a "black box". You do not know what is in the box Yearly the box opens and throws out $ 250,000 in cash (assume no taxes are required to be paid on this amount) What is the price you would pay for this asset if you required a 10% return on your investment? (List any assumption you use.) 29 If a house costs you $250,000 today, what is the value of this house in 5 years if the rate of inflation is 4%? (Assume the inflation rate is applied to the house value and compounded each year) +(1+i) n = factor = Fv of home in after 5th year 30 What is the value of a $35,000 forklift at the end of year 4 if the true value of the equipment declines evenly over a 7 year basis? (market) Value decline per year Value after 4th year year basis 31 What is the book value of a $35,000 forklift in year 4 if the depreciation (accounting) value of the equipment declines evenly over a (Book Value depreciation amount per year) Book Value at end of 4th yr 32 Assume your $200,000 home appreciates in value at a rate of 5% per year. Assume you take out an 80% mortgage (loan to original value) at 6% interest rate for 30 years. Therefore, you provide 20% or $40,000 equity in the home at the outset of the mortgage What is the amount of equity (the then current value of home (current market value) less mortgage outstanding) at the end of the 60th payment? 33 Step 1: Value of home after 5th yr (using annual rate for depreciation) Value of home after 5th year Sten 2 Balance of Mottaage after 60th Payment Balance Sheet Income Statement Sources Uses Puzzle NPV Applied Valuation