Electronics bought new machinery for $5,090,000 million. This is expected
to result in additional cash flows of $1,225,000 million over the next 7 years. What is the payback period for this project? Their acceptance period is five years. Round to two decimal places
Your brother is 6 years old, received a trust fund that will be worth
$23,000 when he is 21 years old. If the fund earns 0.08 interest compounded annually, what is the value of the fund today? Round to two decimals places.
You just bought expensive car stereo for $2,400 online at Mississippi
Best store. The store offered you a choice – X% discount if you pay right now or you can pay within six months. You can borrow money at your bank at 8.40% per annum compounded monthly.
What is the lowest X% for which you will pay the store right now?
You should answer as the percentage. For example if the answer is 14.5%, then enter 14.5 as the answer.
(Hint: Refer to the Cash Discount Practice Problem. Assume 360 days in a year. Monthly bank interest rate to be paid is annual rate/12)
The company can purchase new planning software for $3,600. The software
(asset) has a two-year life, will produce a savings of $600 in the first year and $4,200 in the second year.
The discount rate is 15%. Calculate the project’s payback and discounted payback period assuming steady cash flows. Also calculate the project’s NPV and IRR. Should the project be funded?
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