1.Nina Roberts has the opportunity to invest in a timber forest. She would have to invest $100,000. Revenues of $20,000 per year are projected for 20 years. However, these revenues will not begin coming in for five years because the timber must be seasoned before cutting and selling can begin. Ms. Roberts's hurdle rate is 10%. (Ignore income taxes.)
Calculate the internal rate of return. Round your answer to two decimal places.
2. Present value of $3,000 to be received at the end of each year for the next seven years. The appropriate interest rate is 9%. Round your answer to nearest dollar.
3. Klein Brothers sells products X and Y. Because of the nature of the products, Klein sells two units of product X for each unit of product Y. Relevant information about the products is as follows:
X Y
Sales price per unit $10 $30
Variable cost per unit 8 18
A. Assuming that Klein's fixed costs total $140,000, compute Klein's break-even point in sales dollars.
$
B. Assuming that Klein sells one unit of product X for each unit of product Y and fixed costs remain at $140,000, compute Klein's break-even point in sales dollars.