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    Assignment 3 Managerial Finance

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    SYEDA ALEEZA FATIMA
    This document contains an assignment submitted by five students to their professor for a managerial finance course. It includes two questions and the students' answers. The first question asks to calculate the present value of an asset that produces cash flows of $0, $2,000, $3,000 and $2,500 over four years with a 15% discount rate. The students calculate the present value as $4,914.219. The second question asks what recommendation would be made to "Aunt Tillie" who deposited $33,000 at 10% interest for seven years to reach a future obligation of $65,000. The students recommend either depositing $33,355.28 to reach $65,000, or

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    Assignment 3 Managerial Finance

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    SYEDA ALEEZA FATIMA
    38 views3 pages
    This document contains an assignment submitted by five students to their professor for a managerial finance course. It includes two questions and the students' answers. The first question asks to calculate the present value of an asset that produces cash flows of $0, $2,000, $3,000 and $2,500 over four years with a 15% discount rate. The students calculate the present value as $4,914.219. The second question asks what recommendation would be made to "Aunt Tillie" who deposited $33,000 at 10% interest for seven years to reach a future obligation of $65,000. The students recommend either depositing $33,355.28 to reach $65,000, or

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    This document contains an assignment submitted by five students to their professor for a managerial finance course. It includes two questions and the students' answers. The first question asks to calculate the present value of an asset that produces cash flows of $0, $2,000, $3,000 and $2,500 over four years with a 15% discount rate. The students calculate the present value as $4,914.219. The second question asks what recommendation would be made to "Aunt Tillie" who deposited $33,000 at 10% interest for seven years to reach a future obligation of $65,000. The students recommend either depositing $33,355.28 to reach $65,000, or

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    38 views3 pages

    Assignment 3 Managerial Finance

    Uploaded by

    SYEDA ALEEZA FATIMA
    This document contains an assignment submitted by five students to their professor for a managerial finance course. It includes two questions and the students' answers. The first question asks to calculate the present value of an asset that produces cash flows of $0, $2,000, $3,000 and $2,500 over four years with a 15% discount rate. The students calculate the present value as $4,914.219. The second question asks what recommendation would be made to "Aunt Tillie" who deposited $33,000 at 10% interest for seven years to reach a future obligation of $65,000. The students recommend either depositing $33,355.28 to reach $65,000, or

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    Submitted to: Sir Ather Ashraf

    Assignment no:03
    Managerial finance

    SUBMITTED BY:
    SYEDA DUA ABBAS (F2020274014)
    AYESHA RASHEED (S2021274005)
    HASEEB UL HASSAN (S2021274002)
    RUBAISA TABBASUM (F2020274007)
    AAIZA BILAL (F2020274011)
    1. A corporate financial analyst must calculate the value of an asset which produces year-
    end annual cash flows of $0 the first year, $2,000 the second year, $3,000 the third
    year, and $2,500 the fourth year. Assuming a discount rate of 15 percent, what is the
    value of this asset?

    1. Value asset of cash flow when 0


    PV = CF/ (1 + r) n

    = 0/ (1 + 0.15) 1

    =0
    2. Value asset of cash flow when $2,000
    PV = CF/ (1 + r) n

    = 2000/ (1 + 0.15) 2

    = $1512.287.
    3. Value asset of cash flow when $3,000
    PV = CF/ (1 + r) n

    = 3000/ (1 + 0.15) 3

    = $1972.55

    4. Value asset of cash flow when $2,500


    PV = CF/ (1 + r) n

    = 2500/ (1 + 0.15) 4

    = $1429.38
    Net present value of the asset
    = 1512.287 + 1972.55 + 1429.38
    = $4914.219

    2. Aunt Tillie has deposited $33,000 today in an account which will earn 10 percent
    annually. She plans to leave the funds in this account for seven years earning interest.
    If the goal of this deposit is to cover a future obligation of $65,000, what
    recommendation would you make to Aunt Tillie?

    FV = PV × (1 + r)
    n
    n

    FV = 33000(1+0.10)
    7
    7

    FV =$64307.66
    7

    There are only two ways by that Aunt Tillie will be get $65000 in the future 
     If she can deposit high amount instead of $33000 so we will calculate what amount
    she needs deposit if she wants get $65000 in the future.
     Second way is to find an option in which she can get high interest rate so we will find
    the interest rate in second part. 

    1.What she should be deposited if she wants $65000 in future:

    65000=PV X (1+0.10) 7

    PV = 33355.28
     If she deposits $33355.28, she will get $65000.

    2.If she cannot change the deposit amount, then she will need to find an option in which
    she can get high interest rate:

    65000=33000(1+r) 7

    r =0.101684
    r=10.17%
     If she can get an option in which they will pay her 10.17% interest rate with this option
    she will able to get $65000 at the end of seven years.

    File in MS Word

    File name must be all group IDs with ,,,,,

    Email to UOL.PHD.1@outlook.com

    Do not send this Assignment to my official email 

    Email Subject must be Managerial Finance Assignment 3 Section –

    Assignments received after One week from today will be graded with penalty.

    If I feel somebody has copied from other I have right to deduct up to maximum marks for both. 

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