Question

Speedy Delivery Company is considering two different machines for use in its sorting facility and the company's management put together the following cash flow estimates:

5 NO ACC 310F, Group Assignment November 21, 2019 Group Members You must have between 3-5 group members per team List alphabetically by last name: last name, first name For all time value of money calculations, use time value of money factors with at least 4 decimal places and do not round intermediate calculations, instead, only round your final answer to the nearest whole number. Required: answer cach of the following questions, which are independent from each other. 1. Speedy Delivery Company is considering two different machines for use in its sorting facility and the company's management put together the following cash flow estimates: Model DQT Purchase cost Model MK6 18,000 Estimated net cash inflows: 26,000 Year 1 9,000 Year 2 12,000 7,000 10,000 Year 3 5,000 9,000 Year 4 4,000 6,000 What is the cash payback period on each model (rounded to two decimal places)? Assuming an interest rate of 10 percent, what is the NPV of each model? Briefly explain which machines they should select 2. You recently purchased a new home for $275,000 by agreeing to make annual payments for 15 years, if the interest rate on your loan is 4 percent, what is the total amount of interest you will pay over the life of the loan? 3. You recently received a birthday gift of $500 and you decide to save it for later use. If you deposit it into an investment account that earns 6 percent interest, how much will be in the account in 3 years?

Answer 1

Answer-1 Calculation Of Present value Calculation Of Present value Model- DQT Model- MK6 P.v factor @10P.V 1S P.v factor P.V Yr Amount Yr Amount 1 $-26,000.00 0.9901 11,881.19 0.9803 9,802.96 0.9706 8,735.31 0.9610 5,765.88 0-26,000 1$ 12,000 2 10,000 3 $ 9,000 4$6,000 -18,000 -18,000.00 1$ 2 $ 3 $ 4 S 0.9901 $ 0.9803 $ 0.9706 $ 9,000 8,910.89 7,000 6,862.07 4,852.95 5,000 0.9610 $ 4,000 3,843.92 Net Present Value $10,185.34 6,469.84 Net Present Value Since the Net Present value of Model MK6 is higher than Model DQT, hence MK6 should be selected

Answer-2 Amount of loan financed $2,75,000.00 Time period (in yrs) 15 4.00% Interest rate No of installments 15 Monthly payment a mount $ -24,733.80 Total Amount of Interest to be paid over the period of Loan is $ 96,007.04 Amortization table (payment rounded to near cent) Month Interest expens Monthly payment Principle repayment Outstanding Principle S 2,75,000.00 0 24,733.80 S 24,733.80 S 13.733,80 S 2,61.266.20 1 S 11,000.00 S 14,283.15 2,46,983.04 14,854.48 S 2,32,128.56 15,448.66 2,16,679.90 16,066.61 S 2,00,613.30 16,709.27 1,83,904.02 17,377.64 1,66,526.38 18,072.75 1,48,453.64 18,795.66 $ 1,29,657.98 19,547.48 S 1,10,110.49 2 S 10,450.65 $ 9,879.32 S 24,733.80 S 24,733.80 S 24,733.80 S 24,733.80 S 24,733.80 S 3S 9,285.14 S 8,667.20 S 8,024.53 S 4 S 5S 6 S 7 S 7,356.16 S 8 S 6,661.06 S 24,733.80 5,938.15 $ 5,186.32 S 24,733.80 S 9 S 10 S 11 S 24,733.80 24,733.80 S 4,404.42 89,781.11 20,329.38 21,142.56 S 3,591.24 S 2,745.54 S 1,866.01 S 951.30 S 12 S 13 S 14 S 68,638.55 24,733.80 24,733.80 S 24,733.80 S 21,988.26 S 22,867.79 S 23,782.50 S 46,650.29 23,782.50 15 $ $ 96,007.04 S 24,733.80 $ 3,71,007.04 $ 0.00 Total 2,75,000.00 Answer-3 Total amount in the account at the end of three years will be $595.51 Amount at the Interest ra te Interest Year Balance at the end 30.00 S 1S 6% S 530.00 500.00 2 S 3$ 31.80 S 33.71 $ 6% S 530.00 561.80 6% S 595.51 561.80 Answer -4 Total amount in account at the end of 45 years will be $ 10,43,565.17 Year Amount at the Interest rate Interest Balance at the end 1S 8% S 200.00 S 416.00 S 649.28 S 901.22 S 1,173.32 S 1,467.19 S 2,500.00 2,700.00 2 S 3 S 8% S 8% S 5,200.00 5,616.00 8,116.00 4S 11,265.28 5S 14,666.50 8,765.28 8% S 12,166.50 15,839.82 8% S 8% $ 8% S 6 S 18,339.82 7 S 22,307.01 19,807.01 24,091.57 1,784.56 S 8 S 26,591.57 9 S 31,218.89 10 S 36,216.41 11 S 41,613.72 12 S 47,442.82 13 S 53,738.24 14 S 60.537.30 8% S 2,127.33 S 28,718.89 8% S 8% S 2,497.51 $ 2,897.31 S 33,716.41 39,113.72 3,329.10 S 3,795.43 $ 4,299,06 S 4,842.98 S 8% $ 8% S 44,942.82 51,238.24 8% S 58,037.30 8% S 8% S 65,380.28 15 S 67,880.28 16 S 75,810.71 5,430.42 73,310.71 6,064.86 S 6,750.05 $ 7,490.05 S 8,289.25 S 8%| S 81,875.56 17 S 84,375.56 18 S 93,625.61 8% $ 91,125.61 8% S 8% S 8% S 1,01,115.66 19 $1,03,615.66 20 $1,14,404.91 1,11,904.91 9,152.39 S 1,23,557.30 21 $1,26,057.30 22 $1,38,641.89 23 $1,52,233.24 8% S 8% S 10,084.58 1,36,141.89 11,091.35 1,49,733.24 12,178.66 $ 13,352.95 S 14,621.19 S 15,990,88 S 8% S 1,64,411.90 24 $1,66,911.90 25 $1,82,764.85 26 S1,99,886.04 8% $ 1,80,264.85 1,97,386.04 8% S 2,15,876.92 17,470.15 S 19,067.77 $ 27 $2,18,376.92 28 S2,38,347.07 29 $2,59,914.84 30 $2,83.208.03 8% S 2,35,847.07 8% S 2,57,414.84 20,793.19 S 22,656.64 S 24,669.17 S 8% $ 2,80,708.03 8% S 8% S 3,05,864.67 31 $3,08,364.67 3,33,033.84 32 S3,35,533.84 33 $3,64,876.55 34 S 3,96,566.68 35 $4,30,792.01 36 $4,67,755.37 37 $5,07,675.80 38 $5,50,789.86 39 $5,97,353.05 40 $6,47,641.30 41 $7,01,952.60 42 $7,60,608.81 43 $8,23,957.51 44 $8,92,374.11 8% S 26,842.71 $ 29,190.12 $ 31,725.33 S 3,62,376.55 8% S 3,94,066.68 8% S 8% S 8% S 4,28,292.01 34,463.36 S 37,420.43 $ 40,614.06 S 4,65,255.37 5,05,175.80 8% S 5,48,289.86 44,063.19 47,788.24$ 51,811.30 S 56,156.21 S 8% S 8% S 5,94,853.05 6,45,141.30 8% S 8% S 8% S 6,99,452.60 7,58,108.81 60,848.70 8,21,457.51 8% S 8% S 65,916.60 $ 8,89,874.11 71,389.93 9,63,764.04 45 S9,66,264.04 8% S 77,301.12 10,43,565.17