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(a) If Project A is completed today, its required payment is $90,000. However, investors decided to pay off the project only at the end
(a) If Project A is completed today, its required payment is $90,000. However, investors decided to pay off the project only at the end of year 3. The required payment for the project will increase by 4% every year. With this in mind, the investors will deposit an investment amount to a bank account with an interest rate of 7% per year. The deposits will occur at the end of year 1, year 2, and year 3, respectively. Information about this project is shown in the figure below: A 1 Required payment (present value) 2 Rate of increase per year if payment is not paid off 3 Account interest rate per year 4 Year of pay off 5 6 7 Required payment 3 years later (using FV function) 8 Required deposit at end of each year (using PMT function) 9 10 11 12 13 14 15 B $90,000.00 4.00% 7.00% C Year Deposit at end of year Accumulated account balance at end of year 1 2 3 Round your answers to two (2) decimal points. Calculate the project payment amount if it will only be paid three years later and the required deposit at the end of each year if investors were to settle this payment at the end of year 3. State the Excel formula for Cell B7 and Cell B8. Write down the Excel formulas for Cells B13:C15.
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Solution a Project Payment and Deposits 1 Project Payment at Year 3 Cell B7 We need to find the Future Value FV of the initial 90000 considering a 4 a...Get Instant Access to Expert-Tailored Solutions
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