Assignment 3 - Coursera
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You submitted this Assignment on Mon 11 Nov 2013 6:59 AM PST. You got a score of 100.00 out of 100.00.
Top of Form
Please read all questions and instructions carefully. Note that you only need to enter answers in terms of numbers and without any symbols (including $, %, commas, etc.). Enter all dollars without decimals and all interest rates in percentage with up to two decimals. Read the syllabus for examples.The points for each question are listed in parentheses at the start of the question, and the total points for the entire assignment adds up to 100.
Question 1
(5 points) Sachin has asked his flat mate Jason for a $500 loan to cover a portion of his rent and utility costs. Sachin proposes repaying the loan with $300 from each of his next two financial aid disbursements, the first 4 months from now and the second 12 months from now. Jason's alternative is to earn 5% annually in his money market account. Assume there is no risk of default, and that compounding is monthly. What is the NPV of the loan? (Enter just the number without the $ sign or a comma; round off decimals.)
Answer for Question 1
Your Answer
Score
Explanation
80
Correct
5.00
Correct. You know compounding and figuring out NPV.
Total
5.00 / 5.00
Question Explanation
This is a simple NPV problem, where the loan is positive NPV only because Sachin cannot borrow at market rates,
Question 2
(5 points) Jacob has an opportunity to invest in a new retail development in his building. The initial investment is $50,000 and the expected cashflows are as follows: Year 1: $2,500 Year 2: $5,000 Year 3: $5,000 Year 4: $7,500 Year 5: $10,000 Year 6: $10,000 Year 7: $15,000 Year 8: $15,000 What is Jacob's IRR on this investment?(No more than two decimals in the percentage interest rate, but do not enter the % sign.)
Answer for Question 2
Your Answer
Score
Explanation
6.34
Correct
5.00
Correct. This is where a spreadsheet comes in handy.
Total
5.00 / 5.00
Question Explanation
You submitted this Assignment on Mon 11 Nov 2013 6:59 AM PST. You got a score of 100.00 out of 100.00.
Top of Form
Please read all questions and instructions carefully. Note that you only need to enter answers in terms of numbers and without any symbols (including $, %, commas, etc.). Enter all dollars without decimals and all interest rates in percentage with up to two decimals. Read the syllabus for examples.The points for each question are listed in parentheses at the start of the question, and the total points for the entire assignment adds up to 100.
Question 1
(5 points) Sachin has asked his flat mate Jason for a $500 loan to cover a portion of his rent and utility costs. Sachin proposes repaying the loan with $300 from each of his next two financial aid disbursements, the first 4 months from now and the second 12 months from now. Jason's alternative is to earn 5% annually in his money market account. Assume there is no risk of default, and that compounding is monthly. What is the NPV of the loan? (Enter just the number without the $ sign or a comma; round off decimals.)
Answer for Question 1
Your Answer
Score
Explanation
80
Correct
5.00
Correct. You know compounding and figuring out NPV.
Total
5.00 / 5.00
Question Explanation
This is a simple NPV problem, where the loan is positive NPV only because Sachin cannot borrow at market rates,
Question 2
(5 points) Jacob has an opportunity to invest in a new retail development in his building. The initial investment is $50,000 and the expected cashflows are as follows: Year 1: $2,500 Year 2: $5,000 Year 3: $5,000 Year 4: $7,500 Year 5: $10,000 Year 6: $10,000 Year 7: $15,000 Year 8: $15,000 What is Jacob's IRR on this investment?(No more than two decimals in the percentage interest rate, but do not enter the % sign.)
Answer for Question 2
Your Answer
Score
Explanation
6.34
Correct
5.00
Correct. This is where a spreadsheet comes in handy.
Total
5.00 / 5.00
Question Explanation