asng 2
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fin_310_week_1_assignment_problems.xlsxProblem 1
| Rasmussen College - FIN 310 - Module 01 Written Assignment - Problems | ||
| Problem 1 | ||
| 1. | Calculate the following: | |
| a) | The present value of $15,000 received in 5 years discounted at 8%. | |
| b) | The present value of $25,000 received in 5 years discounted at 8%. | |
| c) | The present value of $15,000 received in 10 years discounted at 8%. | |
| d) | The present value of $15,000 received in 5 years discounted at 12%. | |
| e) | The future value of $10,000 today paid out in 5 years at an interest rate of 8% (annual compounding) | |
| f) | The future value of $10,000 today paid out in 5 years at an interest rate of 8% (semi-annual compounding) | |
| g) | The future value of $10,000 today paid out in 5 years at an interest rate of 8% (monthly compounding) |
Problem 2
| Rasmussen College - FIN 310 - Module 01 Written Assignment - Problems | ||
| Problem 2 | ||
| 2. | A project has an initial cost of $75,000 and expected net cash inflows of $18,000 starting in one year for eight consecutive years. Assuming the project's cost of capital is 14% calculate the following: | |
| a) | NPV | |
| b) | IRR | |
| c) | MIRR | |
| d) | PI | |
| e) | Payback Period | |
| f) | Discounted Payback Period |
Problem 3
| Rasmussen College - FIN 310 - Module 01 Written Assignment - Problems | |||
| Problem 3 | |||
| 3. | Your company is evaluating two projects with the below cash flow expectations. Answer the following questions: a) Calculate the NPV for each project under various cost of capital assumptions (5%, 10% and 15%). b) Calculate the IRR for these two projects. c) Assuming a cost of capital of 11% which of these projects would be creating value for investors? d) Calculate the Payback Period for these two projects. e) If we could only choose one project which would you recommend? Why? | ||
| Year | Project A | Project B | |
| 0 | $ (150,000) | $ (250,000) | |
| 1 | $ 25,000 | $ - 0 | |
| 2 | $ 75,000 | $ - 0 | |
| 3 | $ 50,000 | $ - 0 | |
| 4 | $ 25,000 | $ - 0 | |
| 5 | $ 20,000 | $ - 0 | |
| 6 | $ 10,000 | $ 350,000 |
