1. You want to retire in 35 years to live off your savings. You want to have $10,500 per quarter in real dollars (i.e accounts for inflation) to spend for the next 30 years upon retiring. You assume inflation will be about 4.5% per year when you retire and remain at the same value for the next 30 years. If you can earn 8.5% per year on investments before and after retirement, how much will monthly payments be before you retire if you want to achieve this goal upon retirement?

2. Assuming we begin a project, which has the same OCFs and WACC as those in this company. You spend $4,000,000 to begin a project and you increase initial (beginning) net working capital by 50,000. At the end of the project, you will be able to recover 30% of your investment back as the salvage value. What are the NPV, IRR and profitability Index (PI) of this project. What if payback is 1.5 years, what will be your decision? What if discounted payback is 2.5years, what will be your decision? Using If statements, show whether you'll accept or reject the project.

2. You want to retire in 35 years to live off your savings. You want to have $10,500 per quarter in real dollars (i.e accounts for inflation) to spend for the next 30 years upon retiring. You assume inflation will be about 4.5% per year when you retire and remain at the same value for the next 30 years. If you can earn 8.5% per year on investments before and after retirement, how much will monthly payments be before you retire if you want to achieve this goal upon retirement? Upon Retiring Before Retiring inflation nominal APR real rate Frequency 4.5% 8.5% 4.00% PV FV INY O IN 4.0% 360 $10,500.0 420 PMT PMT 3. Assuming we begin a project, which has the same OCFs and WACC as those in this company. You spend $4,000,000 to begin a project and you increase initial (beginning) net working capital by 50,000. At the end of the project, you will be able to recover 30% of your investment back as the salvage value. What are the NPV, IRR and profitability Index (PI) of this project. What if payback is 1.5 years, what will be your decision? What if discounted payback is 2.5years, what will be your decision? Using If statements, show whether you'll accept or reject the project. Year 1 Year 2 Year 3 Year 4 Year 5 $ Year 0 values $ 4,000,000 $ 50,000 $ 2,950,000 235,000 105,000 $ 475,000 EBIT Depreciation Taxes* OCF Year 0 2,950,000 235,000 1,032,500 2,152,500 Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Initial Outlay Initial NWC EBIT Depreciation Change in NWC Capital spending Increase per year EBIT Depreciation Change in NWC Capital spending WACC Tax rate 15% 20% 10% 20% 9% 35% Decision Using "If Statement" NPV IRR P.I. Payback Discounted Payback