create a 350 word memo for management describe the use of internal rate of return, net...

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Finance

create a 350 word memo for management
describe the use of internal rate of return, net present value, andpayback method in evaluating cash flows.
describe the advantages and disadvantages of each method.
calculate:
1 if you want to accumulate $500,000 in 20 years, how much you needto deposit today that pays interest rate of 15%.
2. what is the future value if you plan to invest$200,000for 5 years and the interest rate is 5%.
3. what is the interest rate for an initial investmentof $100,000 to grow to $300,000 in 10 years.
4. if your company purchases any annuity that will pay$50,000 per year for 10 years at 11% discount rate, what is thevalue of the annuity on the purchase date if the first annuitypayment is made on the date of the purchase.
5. what is the rate of return required to accumulate$400,000, if you want to invest $10,000 per year for 20 years.assume all payments are made at the end of the period.
calculate:
the project cash flow generated for project A and project B.
1. which project would you select and why?
2.which project would you select under payback method if thediscount rate is 10% for both projects?
Use Microsoft Excel!!!!
Project A:
initial investment is $10,000
year 1 $5,000
year 2 $5,000
year 3 $5,000
Project B:
initial investment is $55,000
year 1 $20,000
year 2 $20,000
year 3 $20,000

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3.7 Ratings (468 Votes)

1 Present value fv1rn r 15 50000011520 3055014 2 Future value pv1rn 2000001055 2552563 3 Interest rate fvpv1n 3000001000001101 1161 4 present value of annuity Using present value function in MS excel pvratenperpmtfvtype rate 115 nper 10 pmt 50000 fv 0 type 1 PV11105000001 32685238 5 rate of return Using rate function in MS excel ratenperpmtpvfvtype nper 20 pmt 10000 pv 0 fv 400000 type 0 RATE201000004000000 677 6 Year cash flow present value of cash flow cash flow1rn r See Answer

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create a 350 word memo for managementdescribe the use of internal rate of return, net present value, andpayback method in evaluating cash flows.describe the advantages and disadvantages of each method.calculate:1 if you want to accumulate $500,000 in 20 years, how much you needto deposit today that pays interest rate of 15%.2. what is the future value if you plan to invest$200,000for 5 years and the interest rate is 5%.3. what is the interest rate for an initial investmentof $100,000 to grow to $300,000 in 10 years.4. if your company purchases any annuity that will pay$50,000 per year for 10 years at 11% discount rate, what is thevalue of the annuity on the purchase date if the first annuitypayment is made on the date of the purchase.5. what is the rate of return required to accumulate$400,000, if you want to invest $10,000 per year for 20 years.assume all payments are made at the end of the period.calculate:the project cash flow generated for project A and project B.1. which project would you select and why?2.which project would you select under payback method if thediscount rate is 10% for both projects?Use Microsoft Excel!!!!Project A:initial investment is $10,000year 1 $5,000year 2 $5,000year 3 $5,000Project B:initial investment is $55,000year 1 $20,000year 2 $20,000year 3 $20,000