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Microsoft Excel 2010 Data Analysis and Business Modeling

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71 views1 page

Microsoft Excel 2010 Data Analysis and Business Modeling

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Kiều Anh Lê
Copyright
© © All Rights Reserved
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62 Microsoft Excel 2010: Data Analysis and Business Modeling

Problems
1. An NBA player is to receive a $1,000,000 signing bonus today and $2,000,000 one year,
two years, and three years from now. Assuming r=0.10 and ignoring tax considerations,
would he be better off receiving $6,000,000 today?
2. A project has the following cash flows:

Now One year from now Two years from now Three years from now
–$4 million $4 million $4 million –$3 million

If the company’s cost of capital is 15 percent, should it proceed with the project?
3. Beginning one month from now, a customer will pay his Internet provider $25 per
month for the next five years. Assuming all revenue for a year is received at the middle
of a year, estimate the NPV of these revenues. Use r=0.15.
4. Beginning one month from now, a customer will pay $25 per month to her Internet
provider for the next five years. Assuming all revenue for a year is received at the
middle of a year, use the XNPV function to obtain the exact NPV of these revenues. Use
r=0.15.
5. Consider the following set of cash flows over a four-year period. Determine the NPV of
these cash flows if r=0.15 and cash flows occur at the end of the year.

Year 1 2 3 4
-$600 $550 -$680 $1,000

6. Solve Problem 5 assuming cash flows occur at the beginning of each year.
7. Consider the following cash flows:

Date Cash flow


12/15/01 –$1,000
1/11/02 $300
4/07/03 $600
7/15/04 $925

If today is November 1, 2001, and r=0.15, what is the NPV of these cash flows?
8. After earning an MBA, a student will begin working at an $80,000-per-year job on
September 1, 2005. She expects to receive a 5 percent raise each year until she retires
on September 1, 2035. If the cost of capital is 8 percent a year, determine the total
present value of her before-tax earnings.
9. Consider a 30-year bond that pays $50 at the end of Years 1–29 and $1,050 at the end
of Year 30. If the appropriate discount rate is 5 percent per year, what is a fair price for
this bond?

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