Financial accounting analysis exercise find the solution for better understanding 5-2

2. Consider a savings accounts model. At time t=0, you invest $10,000 in RBC bank. RBC provides 12% return in year 1, 12% return in year 2, and 15% return in year 3. At the end of year 1, you withdraw $660. At the end of year 2, you withdraw $1,210. Your discount rate is 10% per year. (a) Use FCF valuation model to calculate the NPV of your investment at time t=0 (b) Compute RI (residual income) for each year for 3 years. RI = actual income - required income 8