Submitted by: Submitted by admirald
Views: 256
Words: 554
Pages: 3
Category: Business and Industry
Date Submitted: 04/18/2011 07:45 PM
Ginnys Restaaurant
Question 1
A
What is Virginia's current wealth
Cash flow today 2,000,000.00 2,000,000.00
Cash flow 1 3,000,000.00 2,380,188.68
current weatlh 4,830,188.68
current wealth
B
How much money can she spend today 2,000,000.00
she can spend and consume.
C
How much can she spend and consume 1 year from today if she consumes nothing today.
- calculate the future value of 2M in one year
future value + cash flow 2,120,000.00
3,000,000.00
Total 5,120,000.00
Questions 2.
A B C D B+D
Investment Future cash flow from Investment (Bank) Future value of Total Future value of the
(Restaurant) investment (after 1 year) investment in Bank entire investment
Her current wealth is $4M $1,000,000.00 $1,800,000.00 $3,000,000.00 $3,180,000.00 $4,980,000.00
Her future weatlh is $5.460M $2,000,000.00 $3,300,000.00 $2,000,000.00 $2,120,000.00 $5,420,000.00
which means her present wealth is $3,000,000.00 $4,400,000.00 $1,000,000.00 $1,060,000.00 $5,460,000.00
$5,150,943.40 $4,000,000.00 $5,400,000.00 $0 $0 $5,400,000.00
Question 3.
Cash Flow 4,000,000.00
Money consumed (3,800,000.00)
cash flow remaining 200,000.00
Virginia will still have a positive wealth in that year with any of these investments. She could consume the 3.8M A B C D B-D
Investment Future cash flow from Borrow from bank Pay bank back Remaining Wealth
(Restaurant) investment (after 1 year) 6%
$1,000,000.00 $1,800,000.00 $800,000.00 $848,000.00 $952,000.00
$2,000,000.00 $3,300,000.00 $1,800,000.00 $1,908,000.00 $1,392,000.00
$3,000,000.00 $4,400,000.00 $2,800,000.00 $2,968,000.00 $1,432,000.00
$4,000,000.00 $5,400,000.00 $3,800,000 $4,028,000 $1,372,000.00
Question 4.
A (future calculator)
Bank Loan Payments 1 year 6%...