Exercise 1 If you purchase a machine and borrow $72000, what will your approximate monthly payment be if you pay back the loan over 10 years. Assume a 6% interest rate. 10 11 13 23 Exercise 2 If you need $40000 in 15 years, how much should you set aside today? Assume an 3% annual return? 24 25 27 28 38 Exercise 3 You are considering investing $140000 in a project that will generate cash flows of $24000 per year for 8 years and have a salvage value of $20000. If your cost of capital is 11%, what is the net present value (NPV) of the investment? (Put a minus in front of the number if your NPV is negative.) 39 40 42 43 44 45 52 Should you make the investment? Exercise 4 If you want to withdraw $ 12000 each year for 40 years, how much would you need to have saved today to fund these withdrawals? (Assume a 10% annual return.) 53 54 56 57 65 Exercise 5 If you invest $40000, how much will it grow to after 10 years? Assume an annual rate of return is 8%. 66 67 69 70 80 Exercise 6 You are considering investing in a project that will require an initial capital outlay of $60000 and generate annual cash flows of $6587.6 for 15 years. What is the internal rate of return (IRR) for this project? (Enter decimals for percent. For example, enter.10 for 10%.) 81 82 84 A 1-6 8 #9 Cash F Page: 1 of 2