### Question Description

**Purpose of Assignment**

The purpose of this assignment is to allow the student to calculate the project cash flow using net present value (NPV), internal rate of return (IRR), and the payback methods.

**Assignment Steps**** **

**Resources****:** *Corporate Finance*

**Create** a 350-word memo to management including the following:

- Describe the use of internal rate of return (IRR), net present value (NPV), and the payback method in evaluating project cash flows.
- Describe the advantages and disadvantages of each method.

**Calculate **the following time value of money problems:

- If you want to accumulate $500,000 in 20 years, how much do you need to deposit today that pays an interest rate of 15%?
- What is the future value if you plan to invest $200,000 for 5 years and the interest rate is 5%?
- What is the interest rate for an initial investment of $100,000 to grow to $300,000 in 10 years?
- If your company purchases an annuity that will pay $50,000/year for 10 years at a 11% discount rate, what is the value of the annuity on the purchase date if the first annuity payment is made on the date of purchase?
- What is the rate of return required to accumulate $400,000 if you 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 using the NPV method.

- Which project would you select, and why?
- Which project would you select under the payback method? The discount rate is 10% for both projects.
- Use Microsoft
^{®}Excel^{®}to prepare your answer. - Note that a similar problem is in the textbook in Section 5.1.

Sample Template for Project A and Project B:

**Show** all work.

**Submit** the memo and all calcluations.

## Final Answer

know Can you please confirm if you have received the work? Once again, thanks for allowing me to help you R MESSAGE TO STUDYPOOL NO OUTLINE IS NEEDED AS IT IS AnALYSIS

Discount rate

10%

YEARS PROJECT A PROJECT B...

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors