FIN 571 Week 3 Assignment Using the Payback Method, IRR, and NPV Homework Help | Page 2

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 of the annuity on the purchase date if the
first annuity payment is made on the date of purchase?
5. 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: