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A. James is considering a project which would cost $10,000 now. The annual benefits, for...

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Accounting

A. James is considering a project which would cost $10,000 now. The annual benefits, for 4 years, would be a fixed income of $3,500 a year, plus other savings of $500 a year in year 1, rising by 5% each year because of inflation. Running costs will be $1,300 in the first year, but would increase at 10% each year because of inflating labour costs. The general rate of inflation is expected to be 7% and the company's required money rate of return is 16%. Is the project worthwhile? (Ignore taxation)

B. You need $4,000 to buy a new baking oven for your business in 4 years. What value you must have now if the compounded annually return is 12%.

C. Your parents placed $240,000 in a trust fund for you. In 15 years, what will be the worth of the savings. If the estimated rate of return on the trust fund is 10%?

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