3. [Submit salution for rdin A venture capital company plans to invest in one of two start up engineering firms. Investments like this are risky by nature, but the company thinks the risk is about the same for both firms. So, the company will pick the firm that would produce the largest rate of retur on their investment. Assume a monthly accounting period for both. With cither start-up firm, the company would invest $2 million in capital (today). The first engineering firm would agree to repay the company with a single lump sum of $8 million after three years. The second engineering firm would agree to repay the company with a series of monthly payments; after a one year period with no payments, the company would receive $150,000 at the end of each month during the second year, and $250,000 at the each of each month during the third year. Calculate the company's rate of retum on these two investments by doing the following: a) For the first start-up firm investment, create a cash flow diagram showing the investment amount (negative) and the lump sum payment (positive). Use a monthly accounting perod. b) To determine the monthly rate of retum of the investment, equate the investment amount to the present worth of the lump sum payment. Use the engineering economics formulas to write a mathematical expression for this, using the symbol i for the unknown monthly rate of retun (the only unknown in the final equation Then solve for i and report both the monthly and the annual rate of return (in %). c) For the second start-up firm investment, create a cash flow diagram showing the investment amount (negative) and the monthly revenue stream to the company (positive). Use a monthly accounting period. d) To determine the monthly rate of retum of the investment, equate the investment amount to the present worth of the revenue stream received. Use the engineering economics formulas to write mathematical expressions for the present worth of the revenue stream, using the symbol i for the unknown monthly rate of return. Then use the Excel Goal Seek function to find i, and copy and paste an image of your spreadsheet window into your submission. Report the both the monthly and the annual rate of return (in %) in your solution (you may not use the Excel screen image as your final answer for this part) Hint: Use the example on Slide 28 Module 4 as a guide for creating your Excel spreadsheet (this is also how the screen image should look in your solution). To make things casier, do your calculations in Excel as a series of steps. For instance, one step would be to convert a series of monthly payments into a lump sum; the next would be to convert the lump sum to a present worth. You could do this for both years of payment. Then sum the results to find the present worth of all the monthly payments. e Determine which investment is better for the venture capital company and why. To copy tle ina your computer screen, bit Prit Scm (usually a button on the top ng t of your keyboard), then open Word or similar program and Paste (using Ctrd or Edit Paste). If you are submitting a handwritten solut0n engineering paper, use sassors to crop out the part o the pa er you need and tape it into your bomework. I yoa are lastng the MSWord Template then you can d tally crop a selected im ng the crop tool Under Picture Toolson the For Nat tal, in tie SiSe group, dick Crop.J 3. [Submit salution for rdin A venture capital company plans to invest in one of two start up engineering firms. Investments like this are risky by nature, but the company thinks the risk is about the same for both firms. So, the company will pick the firm that would produce the largest rate of retur on their investment. Assume a monthly accounting period for both. With cither start-up firm, the company would invest $2 million in capital (today). The first engineering firm would agree to repay the company with a single lump sum of $8 million after three years. The second engineering firm would agree to repay the company with a series of monthly payments; after a one year period with no payments, the company would receive $150,000 at the end of each month during the second year, and $250,000 at the each of each month during the third year. Calculate the company's rate of retum on these two investments by doing the following: a) For the first start-up firm investment, create a cash flow diagram showing the investment amount (negative) and the lump sum payment (positive). Use a monthly accounting perod. b) To determine the monthly rate of retum of the investment, equate the investment amount to the present worth of the lump sum payment. Use the engineering economics formulas to write a mathematical expression for this, using the symbol i for the unknown monthly rate of retun (the only unknown in the final equation Then solve for i and report both the monthly and the annual rate of return (in %). c) For the second start-up firm investment, create a cash flow diagram showing the investment amount (negative) and the monthly revenue stream to the company (positive). Use a monthly accounting period. d) To determine the monthly rate of retum of the investment, equate the investment amount to the present worth of the revenue stream received. Use the engineering economics formulas to write mathematical expressions for the present worth of the revenue stream, using the symbol i for the unknown monthly rate of return. Then use the Excel Goal Seek function to find i, and copy and paste an image of your spreadsheet window into your submission. Report the both the monthly and the annual rate of return (in %) in your solution (you may not use the Excel screen image as your final answer for this part) Hint: Use the example on Slide 28 Module 4 as a guide for creating your Excel spreadsheet (this is also how the screen image should look in your solution). To make things casier, do your calculations in Excel as a series of steps. For instance, one step would be to convert a series of monthly payments into a lump sum; the next would be to convert the lump sum to a present worth. You could do this for both years of payment. Then sum the results to find the present worth of all the monthly payments. e Determine which investment is better for the venture capital company and why. To copy tle ina your computer screen, bit Prit Scm (usually a button on the top ng t of your keyboard), then open Word or similar program and Paste (using Ctrd or Edit Paste). If you are submitting a handwritten solut0n engineering paper, use sassors to crop out the part o the pa er you need and tape it into your bomework. I yoa are lastng the MSWord Template then you can d tally crop a selected im ng the crop tool Under Picture Toolson the For Nat tal, in tie SiSe group, dick Crop.J