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Discounted Cash Flows and WACC Homework Problems
Please post the answers ( and show your work ) in the assignments section by midnight the last day of the week assigned .
Calculate the future value of 1,535 invested today for 8 years at 6 percent . ( 5 points )
What is the total present value of the following cash stream , discounted at 8 percent ? ( 5 points )
Year Amount 1 400 2 750 3 945 4 145 5 78
3 . If you invested $ 2,000 per year into an IRA for 30 years and received 6 percent return each year , what would the account balance be in 30 years ? ( 5 points )
4 . A friend gives you a proposition . If you give him 1,500 dollars today , he will guarantee your receive 12 percent a year for the next 5 years . How much money will you receive from him at the end of 5 years ? ( 5 points )
5 . You want to buy a new Computer Aided Design ( CAD ) system for your business . The cost of the system is $ 150,000 and you expect to save over $ 40,000 per year in reduced labor costs . Please calculate the net present value of the CAD if your required return is 10 percent and the life of the system is expected to be 5 years . ( 10 points )
6 . Your company is considering converting its heating system in the main office from coal to heating oil . The initial cost of removing the coal fired furnace and installing an new oil fired unit is $ 60,000 . The life of the analysis is 7 years . In the past you spent $ 25,000 per year on coal . The