MGFB10H3 Study Guide - Final Guide: Net Present Value, Sunk Costs, Capital Gain
Document Summary
Ab = 0. 4(0. 14 - 0. 098)(0. 05 - 0. 08) + 0. 6(0. 07 - 0. 098)(0. 1 - 0. 08) = -0. 00084. , we can construct a risk-free portfolio by investing in asset a, 0. 583333 in asset b. Loan balance at the end of year 5: Monthly interest rate from year 6 to year 7: Loan balance at the end of year 7 (assume no payments in years 6 and 7): Value of years 6"s and 7"s payments (1,466. 38 per month) at the end of year 7: Loan balance at the end of year 7: 308,837. 88 44,106. 04 = 264,731. 84. Monthly payment needs to repay the balance in 5 years: Peter: initial capital = 210,000 60,000 = 150,000 and and. = (15,000*(80 30) 100,000))*(1 0. 25)*pvaf0. 08, 5 = 1,946,446. 14. Ucc at end of year 5 = 500,000*(1 0. 5*(0. 3))*(1 0. 3)4 = 102,042. 50. Since the asset class terminates, we should use ucc before the asset sale (ucc5 = 102,042. 50) in the second part of the cca tax shield formula.
