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Class Exercises Formulas

The document provides calculations for net present value (NPV) of two projects, A and B, with respective NPVs of 5,995.6 and 4,558.9 at a 12% discount rate. It also details future values of annual deposits under different conditions, required deposits for a sinking fund, present values of annuities, and a loan amortization schedule for a $10,000 loan at 7% interest over 6 years. Key financial metrics such as future value of annuities, present value calculations, and loan payment schedules are included.

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2 views

Class Exercises Formulas

The document provides calculations for net present value (NPV) of two projects, A and B, with respective NPVs of 5,995.6 and 4,558.9 at a 12% discount rate. It also details future values of annual deposits under different conditions, required deposits for a sinking fund, present values of annuities, and a loan amortization schedule for a $10,000 loan at 7% interest over 6 years. Key financial metrics such as future value of annuities, present value calculations, and loan payment schedules are included.

Uploaded by

Tsegmilkaw
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Computing net present value

Discount Rate 12%


Project A Project B
Year Cash Flow Present Value Cash Flow Present Value
0 -80,000.0 -80,000.0 -100,000.0 -100,000.0
1 20,000.0 17,857.1 25,000.0 22,321.4
2 25,000.0 19,929.8 20,000.0 15,943.9
3 25,000.0 17,794.5 30,000.0 21,353.4
4 30,000.0 19,065.5 35,000.0 22,243.1
5 20,000.0 11,348.5 40,000.0 22,697.1
Net Present Value
Summing C5:C10 5,995.6 4,558.9
Using Excels's NPV Function
IRR 15% 14%
Future value of annual equal deposit
Interest 5%
Annual deposit 1000
Number of deposits 5

Future Value of
Ordinary
Annuity(FVOA) $5,525.63 If deposit made at the end of each year
Future Value of Annuity
Due(FVAD) $5,801.91 If deposit made at the begning of each year

Simple Future Value


Interest 10%

Account Total in
balance,begi Interest account,e
nning of the earned nd year
year during
Year the year
1 $1,000.00
2
3
4
5
6
A simple way

Sinking Fund
Financial Goal 50000
Interest 8%
Number of Years 5

Number of
compounding per Year 1

Required period deposit $8,522.82 If deposit made at the end of each year

Required period deposit $7,891.50 If deposit made at the begning of each year
Present value of annual equal deposit
Interest 5%
Annual deposit 1000
Number of deposits 5

Present Value of Ordinary


Annuity(PVOA) 4,329.5 If deposit made at the end of each year
Present Value of Annuity
Due(PVAD) 4,546.0 If deposit made at the begning of each year

Simple Present Value


Interest 5%
Future Value 1000
Number of years 5
Using Formula 783.5
Loan Amortization
Loan Principal 10000
Interest rate 7.00%
loan term 6

Periodic Payment $2,097.96

Loan Amortization Schedule

Principal at the
begning of the Payment at the Return of
Year Year end of the year Interest principal
1 $10,000.00 $2,097.96 $700.00 $1,397.96
2 $8,602.04 $2,097.96 $602.14 $1,495.82
3 $7,106.23 $2,097.96 $497.44 $1,600.52
4 $5,505.70 $2,097.96 $385.40 $1,712.56
5 $3,793.15 $2,097.96 $265.52 $1,832.44
6 $1,960.71 $2,097.96 $137.25 $1,960.71
7 $0.00

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