## Description

**Calculate **the following time value of money problems: Please show all work!

- 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
^{Â®}Excel^{Â®}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 in excel and answers in a word document

## Explanation & Answer

Attached.

Running head: CORPORATE FINANCE

1

Corporate Finance

Names:

Institution:

CORPORATE FINANCE

2

Corporate finance

All work is shown in the excel document

1. 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%?

$30550.14

2. What is the future value if you plan to invest $200,000 for 5 years and the interest rate is

5%?

$255256.30

3. What is the interest rate for an initial investment of $100,000 to grow to $300,000 in 10

years?

16%

4. If your company purchases an annuity that will pay $50,000/year for 10 years at a 11%

discount rate, what is the value ...

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