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1.  You wish to bank sufficient money to pay for 5 years of undergraduate school plus 3 years of graduate school, at $37,000 per year for your child. Savings account will pay interest rate of 2.0% per year. First annual payment for tuition and for room and board will be made in 10 years. If you deposit money today, how much should you deposit? Illustrate calculations.

2.  Use table for the problem(s) given below.

Project     Cash flow today   
   Cash flow in one year 
   "alpha"    -18    23
   "beta"    15   -12
   "gamma"
   15   -20
   "delta"    -16    21

Suppose that interest rate is 10%. Illustrate calculations.

a. Rank each of the 4 projects from most desirable to least desirable based upon NPV.

b. Which project would you invest in first?

c. Are there any projects which you would not invest in?

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M919557

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