DO NOT USE EXCEL!
Problem 2.3 (20 points) \"Do not round in this problem. Use at least 5 signicant gures. A large entertainment company, let's call them Wisney! Ok, so Wisney is considering buying a new piece of land in the Everglades and planning to put a new campground...but make it fun! The land they are buying has a stipulation that nothing can be built on the property until it is paid in full. Wisney is wealthy and has cash available but due to COVID19 is being a bit more conservative about spending large amounts of money on new projects, therefore they will take out a loan with a nominal rate of 4.65%. a} (5 points) What is the effective interest rate if the interest is compounded semi-annually and payment are made semiannually? (Hint: The effective rate should be in the some period as the payment schedule) i. (5 points) If the land costs $2,500,000. What is the semi-annual payment needed to pay it off in 5 years? b) (5 points) What is the effective interest rate if the interest is compounded monthly and payments are made semi-annually? i. (5 points) If the land costs $2,500,000. What is the semi-annual payment needed to pay it off in 5 years? Problem 2.4 (25 points) Your company is upgrading the breakroom and kitchen. It is going to include an expresso machine, a fridge with compartments for each employee, a sink, microwave, toaster oven, tables chairs, a rock wall, snacks for everyone, and maybe some other bells and whistles. Your managers think that by updating this area employees will not take as long of lunches. They understand this purchase will be at a cost. You are tasked with considering two different options and presenting them to management. Use a 5% interest rate. Walmart Kit Target 540.000 $65,000 510.000 $12,000 Salvage Value $12,000 $25,000 - a. Using NPW (Net Present Worth Analysis) analysis determine which kitchen kit you should choose. {8 points) b. Using EUAW (Equivalent Uniform Annual Worth) analysis determine which kitchen kit you should choose. (3 points) c. You really want the Target kit because it looks nicer and has more bells and whistles. You are willing to keep these products around for longer and therefore extend the lives of these products. Perform the analysis to show that the Target option is the better choice. (How long will the equipment need to last to make it economically justied) (5 points) d. Now from your analysis in part b think about how ethical presenting this information to management would be. Write 2-3 sentences about how you would present this information in a way that showed your bias. You will be graded on your ability to consider two options in an ethical comparison and how you perceive your bias. (4 points)
