Finance Quiz 2 - first payment in 8 years, if you can earn...

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Kyle Finke B.A. 5352 October 21, 2009 Quiz 2 1. A firm invests $350,000 in a project that is expected to produce annual cash flows of $100,000 per year for the first two years, $80,000 per year for the next two years, and $50,000 in the fifth year. If the required return on the project is 12%, what is its NPV? - npv(12,0,{100,000, 100,000, 80,000, 80,000 50,000} =305,160.31 – 350,000 = $-44,839.69 2. How much must you invest today to be able to make four annual payments of $30,000 each with the
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Unformatted text preview: first payment in 8 years, if you can earn 7%? $-63,281.55 npv(7,0{0, 0, 0, 0, 0, 0, 0, 30, 30, 30, 30} 3. If you invest $5000 in an account that pays 7% compounded quarterly for 5 years, then move it to an account that pays 7.5% compounded monthly, how much will you have after 5 years at the new rate? Quarterly N=5 x 4 =20 I = 7% / 4 = 1.75% $7,073.89 quarterly after 5 years After next 5 years (monthly) : N=5x12 = 60 I = 7.5% / 12 =.625% PV= - 7,073.89 FV = $10,280.44...
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