Consider a nominal prize of one million d 25% rate and invests the rest Assume the funds invested eam 6% per year, with both Federal taxes paid from that income and the remainder reinvested. The Assignment 1. Determine the total amount of money the winner will have at the end of twenty years. This will be one year after the last payment 2. Determine the amount the winner would have had at the end of twenty years if he or she had been given one milion dollars all at onc Investment 3. Determine the amount for a lump sum payment that would leave the winner with the same amount as the annuity after twenty years 1. Discuss assumptions that were made to simplify this assignment along with important factors that have been omitted.
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- Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for five years. What is the NPV using 8% as the discount rate?8. An education fund will offer a P40, 000 annual scholarship for the first five years, a P60, 000 scholarship for the next five years, and a P90, 000 scholarship after that. One year before the first scholarship is given out, the fund will be established. Interest is paid on the fund at a rate of 4 1/2 percent. a. What sum of money must be deposited now? b. What is the amount left in the fund after fifth P40, 000 was withdrawn? c. What is the amount left in the fund after the fourth P60, 000 was withdrawn?Isaac Lopez Integrated School needs P20,000,000 to pay building renovation for 6 years. To generate this sum, a sinking fund consisting of four annual payments is established now. What are the necessary payments if money is worth 18% per annum? O a. P2,754,074.56 O b. P2,754,704.56 O c. P2,754,407.56 O d. P2,754,047.56
- Two projects, Alpha and Beta, are being considered using the payback method. Each has an initial cost of $100,000. The annual cash flows for each project are listed below. a) What is the pay back period in years for Alpha? (round to two decimal places) b) What is the pay back period in years for Beta? (round to two decimal places) Year Project Alpha Project Beta 1 25,000 15,000 2 25,000 25,000 3 25,000 45,000 4 25,000 30,000 5 25,000 20,000 25,000 15,000A project consists of a cost (negative cash flow) of $1,000 in Year 0 and a benefit (positive cash flow) of $125,000 in Year 6. The relevant MARR is 100% (one hundred percent) per year. Find the annuity from Year 2 to Year 6 that is equivalent to this project. That is, find the value of A such that receiving $A per year for five years, from Year 2 to Year 6, is equivalent to paying $1,000 in Year 0 and receiving $125,000 in Year 6. Use (A/P,i,N) and (A/F,i,N) in your answer. You may also use other discount factors if you need to. To help you visualize this question, the relevant cash flow diagrams are shown below. You are solving for A: -$1,000 $125,000 Time Time I Equivalent annuity (A): $ a year from Year 2 to Year 6. Work (Remember to use (A/P,i,N) and (A/F,i,N). There's more room on the next page if you need it.)Tyu plans to construct an adiitional building at the end of 10 years at an estimated cost of P5,000,000. To accumulate this amount, it will deposit equal year-end amounts in a fund earning 13%. However, at the end of the fifth year, it decided to have a larger building estimated to cost P8,000,000. What is the equal year-end payments made for the first five years?
- Answer each independent question, (a) through (e), below. a. Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for 5 years. What is the payback period for this investment under the assumption that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) b. Project B costs $5,000 and will generate after-tax cash inflows of $500 in year 1; $1,200 in year 2; $2,000 in year 3; $2,500 in year 4; and $2,000 in year 5. What is the payback period (in years) for this investment assuming that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) c. Project C costs $5,000 and will generate net cash inflows of $2,500 before taxes each year for 5 years. The firm uses straight-line depreciation with no salvage value and is subject to a 25% tax rate. What is the payback period under the assumption that all cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.)…Answer each independent question, (a) through (e), below. a. Project A costs $5,000 and will generate annual after-tax net cash inflows of $1,800 for 5 years. What is the payback period for this investment under the assumption that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) b. Project B costs $5,000 and will generate after-tax cash inflows of $500 in year 1; $1,200 in year 2; $2,000 in year 3; $2,500 in year 4; and $2,000 in year 5. What is the payback period (in years) for this investment assuming that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) c. Project C costs $5,000 and will generate net cash inflows of $2,500 before taxes each year for 5 years. The firm uses straight-line depreciation with no salvage value and is subject to a 25% tax rate. What is the payback period under the assumption that all cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.)…Determine the amount needed now to purchase a machine for P100,000, provide an annual fund of P15,000 for operation and maintenance, and to replace it at the same cost at the end of every ten-year period. Money is worth 7.5% compounded annually.
- A certain project with annual benefit of P 50,000 at the end of each year for a period of 6 years. Assuming money is 10% and benefit ratio is 1.02, compute the cost of the project. a. P426,896.00 b. P426,986.00 c. P426,968.00 d. P462,986.00Answer each independent question, (a) through (e), below. a. Project A costs $10,000 and will generate annual after-tax net cash inflows of $3,700 for 5 years. What is the payback period for this investment under the assumption that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) b. Project B costs $10,000 and will generate after-tax cash inflows of $900 in year 1, $2,400 in year 2, $4,300 in year 3, $3,400 in year 4, and $4,300 in year 5. What is the payback period (in years) for this investment assuming that the cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) c. Project C costs $10,000 and will generate net cash inflows of $4,750 before taxes for 5 years. The firm uses straight-line depreciation with no salvage value and is subject to a 20% tax rate. What is the payback period under the assumption that all cash inflows occur evenly throughout the year? (Round your answer to 2 decimal places.) d.…Solve by using the sinking fund or amortization formula. A manufacturing company has determined that it will need $600,000 in 7 years for a new roof on its southeastern regional warehouse. A sinking fund is established for the roof at 3.6% compounded semiannually. What equal payments (in $) are required every 6 months to accumulate the needed funds for the roof? (Round your answer to the nearest cent.) $ _____