FIN205 Corporate Finance Assignment
Fall 2020
You may work in a group of up to 4 on this Assignment. Please indicate clearly on all submitted Assignments who the members of the group are. Please note, all assignments submitted with more than 4 group members will automatically receive a 0 grade.
No late assignments will be accepted.Submit the assignment to the link in Blackboard before the time it is due. (Note: please follow all the Digital Submission rules (see Syllabus).
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Answer all of the following questions. For each answer, show your work to get full points (stating the answer alone is not sufficient).
(a) What is the payback period for the project? Show your work
(b) What is the net present value of the project ?Show your work
(c)What is the internal rate of return on the project ?Show your work
(d) Under which method(s) above should the company accept the project (applying the acceptance rules)? Explain
FIN205 Corporate Finance Assignment
(a) Calculate the 7 year and 5 year annuity factors at 8% annual interest.
(b) Usingthe annuity factors, find the PV of Machine A and Machine B including all costs (initial + operating).
(c) Which machine is a better choice for the company after considering the different lives of the projects? (Note: be sure to use the equivalent annual annuity method)
Year 0 1 2 3 4 _____5
Sales forecast (in $): 0 4,400,000 4,900,000 5,300,000 5,400,0005,500,000
(a) variable costs are equal to 40% of sales
(b) the discount rate is 11%
FIN205 Corporate Finance Assignment