Question

PLEASE SHOW CLEAR CALCULATION PLEASE

1. If a physician deposits $24,000 today into a mutual fund that is expected to grow at an annual rate of 8%, what will be the value of this investment:

what is the future value factor for each?

a. 3 years from now

b. 6 years from now

c. 9 years from now

d. 12 years from now

　

2. The Chief Financial Officer of a hospital needs to determine the present value of $120,000 investment received at the end of year 5. What is the present value if the discount rate is:

a. 3%

b. 6%

c. 9%

d. 12%

what is the present value factor for each?

　

3. The Forbes OBGYN group purchased a new diagnostic machine for their office for $900,000. The expected cash flows for each year of the five year period is $120,000, $155,000, $186,000, $208,000, and $225,000 for the five years. What is the internal rate of return or the IRR for the project?

4. Determine the Net Present Value for Problem 3 with an interest rate of 10%. Do you proceed or not with the project?

5. Determine the Payback Period for Problem 3.

Answer 1

1 a) FV = PV * (1 + r)^n

PV = 24,000

Future value factor = (1 + r)^n. The second term in each of the below cases is the future value factor.

FV = 24,000 * (1 + 0.08)^3

FV = 24,000 * 1.259712

FV = $30,233.088

b) FV = 24,000 * (1 + 0.08)^6

FV = 24.000 * 1.5868743229

FV = $38.0849837496

c) FV = 24,000 * (1 + 0.08)^9

FV = 24,000 * 1.9990046271

FV = $47,976.1110504

d) FV = 24,000 * (1 + 0.08)^12

FV = 24,000 * 2.5181701168

FV = $60,436.0828032

2. a) PV = FV* 1/(1 + r)^n

PV factor = 1/(1 + r)^n

The second term in each of the below cases is the present value factor.

PV = 120,000 * 1/(1 + 0.03)^5

PV = 120,000 * 0.8626087844

PV = $103,513.054128

b) PV = 120,000 * 1/(1 + 0.06)^5

PV = 120,000 * 0.7472581729

PV = $89,670.980748

c)PV = 120,000 * 1/(1 + 0.09)^5

PV = 120,000 * 0.6499313863

PV = $77,991.766356

d)PV = 120,000 * 1/(1 + 0.012)^5

PV = 120,000 * 0.9421009408

PV = $113,052.112896

Can you please upvote? Thank You :-)