Jose decides to open a restaurant. After analyzing costs and forecasting revenue he realizes he can earn about a 14% return on his investment. What factors must Jose think about in making his decision?
Justin has saved 50,000. He can invest it in a real estate venture that will pay 15% for 10 years, and then in a mutual fund for an additional 10 years at a 9.75 annual return. He’s hoping that in 20 years, when he is 40, he will have enough money to pay for his child’s college education, estimated at about $75000 per year. Will he have enough?
Microsoft Corporation decides to invest in developing a robot that will help the elderly with tasks such as putting on socks, eating, etc. The initial investment for this project is $52,000,000 (52M). The cash flows expected from this investment are 28 million in year 1, 19 million in year 2, 23 million in year 3 and 18 million in year 4. What is the Net Present Value of this project? Would this project be a good investment? Or would it be better to invest $52M in a bond paying 8% annually?