This preview shows pages 1–4. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: Question 23 Cash Flow Diagram (CFD) frpm bank's perspective (Not necessarily to scale) $x $x $x $x 1 2 3 4 $2,000 $x= $564.02 =PMT(5%,4,2000,0) Then the CFD becomes: $564.02 $564.02 $564.02 $564.02 1 2 3 4 $2,000 Pooi Phan needs $2,000 to pay off her bills. She borrows this amount from a bank with plans to pay it back over the next 4 years at $ X per year. Create a cash flow diagram from the bank's perspective Created by shading a cell(s) and right clicking on "Format" and then clicking on "Borders". Also, the "Format Painter came in handy. The value of $x can be determined as follows since the payments are all equal and assuming some interest rate such as 5% annual: Question 25 Cash Flow Diagram (CFD) OF Mercrusier CNC Machine (Not to scale) Since planning horizon is 10 years, an upgrade would not show at year 10. (+) $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000 1 2 3 4 5 6 7 8 9 10 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 () + $5000 $50,000 Mercruiser purchases a used, recently upgraded computer numerical control (CNC) machine for turning operations. It costs $50,000, and since the machine will increase productivity, the company expects to increase sales by $7,000 per year. Maintenance costs are $1,000 per year starting 1 year after purchase. Every 5 years, the machine will require a software upgrade costing $5,000. Draw the cash flow diagram for the scenario described if Mercruiser uses a 10year planning horizon. Question 25 Account 1 for $500 or over: 5.5 percent per year simple interest Account 2 for $2,000 or over: 5 percent per year compound interest Account 3 for $6,000 or over: 6.5 percent per year simple interest Account 4 for $10,000 or over 6 percent per year compound interest Account Amount Rate Type Years End of Year 5 Equation Excel Function 1 $10,000 5.50% Simple 5 $12,750.00 =C12*(1+D12*E12) 2 $10,000 5% Compound 5 $12,762.82 =C13*(1+D13)^E13 =FV(D13,E13,0,C13) 3 $10,000 6.50% Simple 5 $13,250.00 =C14*(1+D14*E14) 4 $10,000 6% Compound 5 $13,382.26 =C15*(1+D15)^E15 =FV(D15,E15,0,C15) Prefer 6% compounded annually....
View
Full
Document
This note was uploaded on 02/15/2012 for the course MBA 101 taught by Professor X during the Spring '11 term at Shawnee.
 Spring '11
 X

Click to edit the document details