1) Assume you are a risk manager for company considering a= $4,800,000 investment in new 12-year project. $4.8 million cost of project will be declined on the straight-line basis over eight years. Project is expected to make positive operating cash flows equal to= $1,400,000 per year (not including effect of depreciation or taxes). Company’s tax rate is= 35%. Ignoring any risk management considerations, estimate project by computing its net present value and internal rate of return. Suppose company has required return of 12%.
2) You presently opened the brokerage account, depositing= $4,500. You expect account to earn the interest rate of 8.57%. You also plan on depositing $3,000 at the ending of years 5 through 10. Compute the value of account at the ending of twenty years, suppose you earn your expected rate of return?