Ch08In-ClassEx

# Ch08In-ClassEx - Chapter 8 In-Class Exercises 1 Assume that...

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Chapter 8 In-Class Exercises 1. Assume that a company can buy equipment for \$1,100,000 that it expects will increase its net income and cash flow by \$325,000 per year for four years? Should the company buy the equipment if it requires a 10% return on its investment? If yes, by how much will it be better off for having bought the equipment. If no, by how much worse off will it be for having bought the equipment. 2. You have decided to purchase a new car after graduating from UT. You have found a beautiful new BMW that will cost you \$29,000. You can finance your purchase with a note at an annual rate of 12%. You intend to pay \$9,000 down and finance the balance over 18 months. (a) How much interest would you pay over the entire life of the loan? (b) Assume you receive a nice bonus at the end of the first year of your new job. You decide the best thing to do would be to pay off the loan on your car. How much would you have to pay assuming you had already made the first 12 payments? 3.

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## This note was uploaded on 11/30/2010 for the course ACC 310F taught by Professor Verduzco during the Spring '07 term at University of Texas.

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Ch08In-ClassEx - Chapter 8 In-Class Exercises 1 Assume that...

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