- Uncategorized
- March 28, 2020
Financial Management
4
FinancialManagement
FinancialManagement
PartA
Futurevalue is calculated by the formula:
FV=PMT)
Key
FV-future value
PMT-the initial value.
r-The rate of interest or returns in percentage.
n-Is the period given per annum, quartile or semi quartile.
PV-Present Value.
The future value a 6% interest rate:
FV=${(15000)+ (20000)+ (30000)+ (0)+ (0)+ (0)+ (150000(1.06))}
=22554.5+28370.4+40146.8+159000
=$250071.70
The future value at 9% interest rate:
FV=${(15000)+ (20000)+ (30000)+ (0)+ (0))+ (0)+ (150000(1.09))}
=$(27420.6+33542.0+46158.7+163500)
=$270621.30
The future value of cash flow at 15% interest rate:
FV=${(15000)+ (20000)+ (30000)+ (0)+ (0)+ (0))+ (150000(1.15))}
=$(39900.3+46261.2+60340.7+172500)
=$319002.20
PartB
PV=PMT([1-]/r)
PV=${500×([1-]/0.06)}
=$6,391.68
PartC
PMT=PV×R
R=PMT/PV
PV=1,850,000
N=25
PMT=150,000
Usinga PMV calculator,
R=5.56%
PartD
PV=PMT ([1-]/r)
In the case for 8%
=${25000×(1-]/0.08)}
=${25000×9.8181}
=$2,454,536.85
In the case for 5%
=${25000×(1-]/0.05)}
=$(25000×12.4622)
=$3,115,552.57
Iwill choose the 5% payoff rate because of it bigger net value in thelong run.
The investment rate to yield $2,867,480 from $250,000 is found by the formula below:
R=$250,000× (1 – 1/ (1+R) 20) /$2,867,480
2,867,480R=250000-()50000000
2867480R+=250000+250000R-12500000000000
2617480R+=1.25e13
+R=4775585.68
R=6%