lab%202011.02.11%20problems

# lab%202011.02.11%20problems - FNAN 301 Lab problems...

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FNAN 301 Lab problems – 2/11/2011 Group lab problem You own a bowling alley that is expected to make annual cash flows forever. The cost of capital is 12.5%. The next annual cash flow is expected in one year from today and all subsequent cash flows are expected to grow annually by 2.5%. What is the value of the bowling alley if you know that the cash flow in 5 years from today is expected to be \$100,000? Group lab problem What is the value of a night club that is expected to generate fixed cash flows of \$170,000 with the first cash flow in 4 years and the last cash flow in 9 years if the appropriate discount rate is 13.5 percent? Group lab problem Cheryl wants to buy a computer. Patriot Computers would let her make monthly payments of \$60 for 3 years at a monthly interest rate of 0.5 percent. Her first payment to Patriot Computers would be due immediately. Computer City would let her make quarterly payments of \$220 for 2 years at a quarterly interest rate of 1.6 percent. Her first payment to Computer City would be
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## This note was uploaded on 02/16/2011 for the course FINANCE 301 taught by Professor Murray during the Spring '09 term at George Mason.

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