Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A lump-sum deposit of N$5 000 is made now into an investment account that pays 6% p.a. Withdrawal of the moneys deposited will be as

A lump-sum deposit of N$5 000 is made now into an investment account that pays 6% p.a.

Withdrawal of the moneys deposited will be as follows;

- Withdrawal of an equal amount end-of-year of N$1 000 for 5 years, starting next year.

At the end of the sixth year, the account will be closed, and the remaining balance be withdrawn.

a) Draw a cash flow diagram indicating the investment and withdrawals

b) Determine the final account balance doing calculation by hand, aided by interest factors

1.2) An energy utility company requires that for each of power generators annual investments be placed into a capital reserve fund to ensure funds being available for unexpected major refurbishment of equipment.

For this purpose, N$5 000 was deposited for 15 years which made N$100 000 available for refurbishments.

a) What rate of return did this practice provide to the company?

(Solve both by hand calculation and MS Excel spreadsheet built-in financial functions)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Cost Benefit Analysis Concepts And Practice

Authors: Anthony E. Boardman, David H. Greenberg, Aidan R. Vining, David L. Weimer

5th Edition

1108401295, 978-1108401296

More Books

Students also viewed these Accounting questions

Question

List the capabilities of institutional DSS and ad hoc DSS.

Answered: 1 week ago