Analysis 5 and 6

Section 5:

HW:

1. $10,000 deposited in the bank on January 1 at 7% interest compounded annually. You will keep this money in the bank for 5 years.

Please set up the calculation for Future Value of this deposit.

2. Assuming the interest rate is 7% and the period is 10 years (instead of 5), what is the table factor & how does it compare to 7% for 5 years? What do we learn from this?

3. Now, assuming the interest rate is 8% and the period is 5 years, what is the table factor and how does it compare to 5 years at 7%? What do we learn from this?

4. Pg. 23 of Section 5 gives you data for evaluating various capital budgeting techniques. This problem is a great guide to use for the calculations below. Please calculate (and identify which project to proceed with) the following:

a. Payback

b. ARR

c. NPV (use interest rate of 10%)

d. BCR

Please use the data in the table below:

	Year	Project C	Project D
Investment Outflow	0	(200)	(400)
Cash Inflows	1	50	150
	2	85	200
	3	100	150