2.
Calculation of NPV for A
Time | Cashflow A | PVF @8% | Present value of cashflow |
1 | 4120 | 0.925926 | 3815 |
2 | 2040 | 0.857339 | 1749 |
3 | -1250 | 0.793832 | -992 |
4 | 0 | 0.735030 | 0 |
5 | -1172 | 0.680583 | -798 |
6 | 2400 | 0.630170 | 1512 |
7 | 0 | 0.583490 | 0 |
8 | -200 | 0.540269 | -108 |
9 | -200 | 0.500249 | -100 |
10 | -200 | 0.463193 | -93 |
11 | 2,500 | 0.428883 | 1072 |
NPV | 6058 |
NPV (A) = NPV (B)NPV for B = X x PVFA(8%,11)
6058 / PVFA(8%,11) = X
6058/7.138964 = 849 = X
Value of X is $849 approx
3.
Year of investment = 34
The present value of investments for 34 years ( age of 55 years).
Accumulated value = X x PVA(9%,34)
Present value of Amount at 65 age that is after 10 years = X x PVA(9%,34) x PV(9%,10)
After the age of 65 years, he will withdraw $145,000 for 17 years at beginning of each year.
The present value of withdrawls = $145,000 x PVA(9%,17) x PV(9%,44)
Present value of withdrawls = Present value of investment amount
$145,000 x PVA(9%,17) x PV(9%,44) = X x PVA(9%,34) x PV(9%,10)
X = $145,000 x PVA(9%,17) x PV(9%,44) / (PVA(9%,34) x PV(9%,10))
X = $145,000 x 8.5436 x 0.0226 / (10.5178 x 0.4224)
X = $6302
Ryann must invest $6302 every year
Use Excel. (PV, FV, or PMT) 3) Ryan Knight, age 21, saves X amount at the...
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