You may use your financial calculator or excel for calculations but be sure to show your work (i.e. rate, periods, payments, etc.). For the amortization schedule be sure to print the schedule so all columns fit on one page and only include the first and last pages of the schedule when you pass it in.

1. Aiden Jackson just found out he will inherit $2,500,000 from his aunt. He has two options for investing the inheritance. First, he can invest his money today and be paid a lump sum of $5,000,000 10 years from now. His second option is to invest the money today and receive $400,000 a year for the next 10 years. Ignoring income taxes and assuming the interest rate is constant over the entire investment, which option would earn the higher rate of return for Aiden?

2. Alex Joyce is the sole proprietor of Joyce Enterprises. He is exploring the option of going public because his company is growing exponentially. The consulting firm that is reviewing his financials has questioned whether Joyces CFO is technically competent enough to be the CFO of a publically traded company, as they believe he made several bad financial decisions. The two situations, which the firm brings to Cams attention, are as follows:

1. Joyce purchased the building in which their corporate office is housed on 1/1/21 for $4,700,000. They put down $1,500,000 cash and had to borrow the remaining amount at 6% over a 20-year term. At the time of the purchase, they had the option to lease the building. The 20-year lease would begin on 1/1/21, and called for an immediate payment of $100,000 and then payments of $450,000 beginning on 12/31/21 for the first 10 years and payments of $300,000 beginning on 12/31/31 for the remaining 10 years of the lease. La Fleur had the option to purchase the building for $1 at the end of the lease. Did the CFO make the right decision by purchasing the building? Why or why not? Show your work.
2. This year, the company sold land for a non-interest bearing note. The note calls for annual payments of $20,000 for 4 years. The payments will begin one year from the date of the sale. An appropriate rate of interest for this type of note is 5%. The land had an original purchase cost of $75,000. The CFO told the accounting department to record the sale as follows:

Notes Receivable $80,000

Land $75,000

Gain on Sale of Land $ 5,000

Was this entry correct? If not, provide the correct entry.

3. Rose Daury loans Grace Josephs $500,000. Daury accepts a 5% note, which requires quarterly interest payments for 10 years. The day after receiving the 8^th interest payment, Daury decides to sell the note to Rockland Trust. Rockland Trust agrees to purchase it to yield a 7% return.
   1. What is the amount that Rose Daury will receive on the sale of the note to Rockland Trust?
   2. Prepare the entries that Rose Daury and Rockland Trust will make on the day the note is sold to the bank.

4. Jack Casey is interested in buying a waterfront vacation home and has saved $300,000 for the down payment. His plans call for making additional monthly deposits into an investment account over the next 12 months. Casey wants to make the purchase 18 months from today and wants to have $400,000 saved up for the down payment.
   1. What is the amount of each of the additional payments he must make for his plan to work out? Assume Allen can earn 2% annual return in his investment account.
   2. If Casey takes out a 30-year, $1,200,000 mortgage at 5%, what will his mortgage payments be?
   3. Prepare an amortization schedule to prove that your answer is right and his mortgage will be paid off in 30 years.