5. Tektronix, Inc. is considering the purchase of a new calibration management software for use in performing asset management and calibration data storage for their customers. This software comes with a contract option to use at any point during its ownership to aid with technical systems updates and effective data storage management. The company decides that it will go without this contract for the first 4 years of ownership, planning to begin utilizing it on year 5 and continue through year 8 - where at this time they plan to make another system upgrade. The cost of this contract is $3,500 per year, assumed Tektronix rate of return is 8% per year. (a) Draw the cash flow diagram described above. (b) What will be the present worth of the contract? (c) What will be the future worth of the contract? (d) If Tektronix wishes to pre-pay the contract with uniform payments in years one - four only, what will be the amount of each payment. Land . www. 0821 AU Rights For palent del www. (e) What will be the equivalent uniform annual amount of the contract in years one through eight? 7.9 ch /20 points 6. A new biomedical start-up company just came on the scene showing great promise for its investors. It is forecasted to make a profit each year during its first 4 years of being in business. Revenues are expected to be $40 million in year one, S65 million in year two, S80 million in year three and $110 million in year four. Utilizing a ROR of 12% per year, solve the following: (a) Draw the cash flow diagram (b) What is the present worth of the gains for the first three year? (c) What is the present worth of the gains for all four years? (d) What is the equivalent uniform annual worth of gains through year four? /20 points 5. Tektronix, Inc. is considering the purchase of a new calibration management software for use in performing asset management and calibration data storage for their customers. This software comes with a contract option to use at any point during its ownership to aid with technical systems updates and effective data storage management. The company decides that it will go without this contract for the first 4 years of ownership, planning to begin utilizing it on year 5 and continue through year 8 - where at this time they plan to make another system upgrade. The cost of this contract is $3,500 per year, assumed Tektronix rate of return is 8% per year. (a) Draw the cash flow diagram described above. (b) What will be the present worth of the contract? (c) What will be the future worth of the contract? (d) If Tektronix wishes to pre-pay the contract with uniform payments in years one - four only, what will be the amount of each payment. Land . www. 0821 AU Rights For palent del www. (e) What will be the equivalent uniform annual amount of the contract in years one through eight? 7.9 ch /20 points 6. A new biomedical start-up company just came on the scene showing great promise for its investors. It is forecasted to make a profit each year during its first 4 years of being in business. Revenues are expected to be $40 million in year one, S65 million in year two, S80 million in year three and $110 million in year four. Utilizing a ROR of 12% per year, solve the following: (a) Draw the cash flow diagram (b) What is the present worth of the gains for the first three year? (c) What is the present worth of the gains for all four years? (d) What is the equivalent uniform annual worth of gains through year four? /20 points
