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Need a answer for these. My subject names Corporate Finance. Question 1 (15 marks) You plan to enter into a college three years from now.

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Need a answer for these.

My subject names Corporate Finance.

image text in transcribed
Question 1 (15 marks) You plan to enter into a college three years from now. The cost of education today is $20,000 and is expected to increase at 4% (annual inflation rate). Your parents have deposited $10,000 for you in a CD paying 6% interest annually, maturing three years from now. Uncle John has agreed to finance the balance. If you are going to put Uncle John's gift in an investment earning 10% over the next three years, how much must he deposit now, so you can enter into the college three years later? Question 2 (15 marks) Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow [Bi 0 $54,000 -$23,000 1 1 2,700 l l ,600 2 23,200 1 1,200 3 27, 600 1 2,500 4 46,500 6,000 The company requires a return of 14% on the investment. a) Which project should the company choose based on Payback period and why? b) Which project should the company choose based on NPV and why? 0) Which project should the company choose based on [RR and why? (1) Which project should the company choose based on Protability Index and why? e) Which project should the company nally choose and why

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Intermediate Financial Management

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