FIN Analysis 325 question dealing with capital investments...need some direction please.?

Julie Kowalis, an investment analyst, want to know if her investments during the past four yrs have earned at least a 12% return. Four years ago, she had the following investments.
a. She purchased a small building for $50,000, rented space in it. Rec'd rental income of $8,000 for each of the 4 yrs, then sold building this year for $55,000.
b. She purchased a small refreshment stand near the city park for $25,000. Annual income was $5,000 for each of the four years. She sold stand for $20,000 this year.
c. She purchased an antique car for $5,000 four years ago. She sold it this year to collector for $7,000.
Required:
1. Using the net present value method, determine whether or not each investment earned at least 12%.
b. Did the investments as a whole earn at least 12%. Explain.

a. Yes. Earned above 12%. PV = - $50,000, N = 4, PMT = 8,000, FV = 55,000, I/Y = ?
I/Y = 17.9196%

b. Yes. PV = - $25,000, N = 4, PMT = 5,000, FV = 25,000, I/Y = ?
I/Y = 16.0557%

c. No. PV = - $5,000, N - 4, PMT = 0, FV = 7,000, I/Y = ?
I/Y = 8.7757%

1. See above work

1b. Yes. PV = - $5,000 - 50000 - 25000, N - 4, PMT = 8,000 + 5000, FV = 55,000 + 20000 + 7,000, I/Y = ?
I/Y = 16.7382%

Tags

　　Earn Money 　　Direct Investment 　　Debt Financing 　　Capital Investment 　　Business Investment 　　Business financing 　　Business Invest 　　Business Debt

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