Answers to Assignment 5

Answers to Assignment 5 - The University of Texas at Austin...

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The University of Texas at Austin McCombs School of Business, Business Foundations Program ACC 310F: Foundations of Accounting, Fall 2010 Answers to Assignment 5
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A. The Roberts Company has decided to invest in a project that is expected to produce the following cash flows: $8,000 in year 1, $12,000 in year 2 and $10,000 in year 3 at which time it would be sold for $2,500. The project would require a $15,000 investment. What is the net present value of the project assuming an interest rate of 10 percent? (15,000) x 1 = (15,000) 8,000 x 0.909 = 7,272 12,000 x 0.826 = 9,912 12,500 x 0.751 = 9,387.50 NPV 11,572 B. You plan on taking an extended vacation upon your graduation and to do so you will need $5,000 in three years. If the bank pays interest of 6 percent, how much should you deposit today?
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This note was uploaded on 06/07/2011 for the course ACC 310F taught by Professor Verduzco during the Fall '07 term at University of Texas.

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Answers to Assignment 5 - The University of Texas at Austin...

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