11.(TCO F) Company A has the
opportunity to do any, none, or all of the projects for which the net cash
flows per year are shown below. Projects A and C can be done together. Projects
B and C can be done together. But Projects A and B are mutually exclusive. The
company has a cost of capital of 18%. Which should the company do and why? You
must use at least two capital budgeting methods. Show your work.
A 
B 
C 

0 
500 
500 
600 
1 
200 
200 
100 
2 
200 
600 
100 
3 
200 
400 
100 
4 
200 
200 
100 
5 
200 
300 
100 
6 
200 
100 

7 
300 
100 
10.(TCO
F) A project requires an initial cash outlay of $40,000 and has expected cash
inflows of $12,000 annually for 7 years. The cost of capital is 10%. What is
the project’s discounted payback period? Show your work.(Points : 20)
Question 
Question 8.8.(TCO F) A project requires an initial cash outlay of $40,000
and has expected cash inflows of $12,000 annually for 7 years. The cost of
capital is 10%. What is the project’s payback period? Show your work.
Question 
6.(TCO
B) An accident victim has received a structured settlement. According to the
terms of the agreement, the victim will receive $10,000 per year at the end of
each year for the next 10 years. Additionally, the victim will receive $20,000
in 10 years. The victim believes they could get 7% annually on an investment
they could make if they had all the money now. What would the money be worth to
them if they could get it now? Show your work.(Points : 20)
5.(TCO
B) A grandfather sets up a trust for his only grandchild. The trust consists of
an annuity that will pay $5,000 monthly to the grandchild for 18 years. The
annuity pays an annual return of 5% and makes the payments monthly at the end
of the month. Return on the annuity is 5% annually. The payments to the
grandchild are paid at the beginning of the month. The annuity will have
a value of $0 at the end of the 18 years. How much needs to be deposited to set
up the annuity? Show your work.(Points : 20)
4.(TCO
B) You take out a 5 year car loan for $20,000. The loan has a 5% annual
interest rate. The payments are made monthly. What are the monthly payments?
Show your work.(Points : 20)
3.(TCO
B) You plan on retiring in 20 years. You currently have $275,000 and think you
will need $1,000,000 to retire. Assuming you don’t deposit any additional money
into the account, what annual return will you need to earn to meet this goal?(Points : 20)