True or False

1. Your venture has signed a new consulting contract that will require you to invest in new analytical software and a new computer. The cost of this equipment is $200,000. You will finance this investment by borrowing from the bank. The loan will be for 6 years at a rate of 7%.The loan will be amortized over the three years so that at the end of year 3 your loan balance will be $0.

The principal payment at the end of year 3 is $32,010.44 plus or minus $5. True / False

2. Your venture has signed a new consulting contract that will require you to invest in new analytical software and a new computer. The cost of this equipment is $200,000. You will finance this investment by borrowing from the bank. You want to make your periodic payments as low as possible. You have to offers from banks. Either The loan will be for 3 years at a rate of 9%.The loan will be amortized over the three years so that at the end of year 3 your loan balance will be $0 or The loan will be for six years at a rate of 10% an again the loan will be fully amortized over the six year period.

The loan with the lowest payment is 6 years at 10%. True / False

3. Your venture has signed a new consulting contract that will require you to invest in new analytical software and a new computer. The contract will generate the cash flows at specific times. You decision rule is to only accept projects that have an internal rate of return that exceeds 12%.

dates	cash flows
12/10/2022	-$12,000.00
4/10/2026	$4,000.00
8/10/2029	$4,000.00
12/10/2030	$4,000.00
4/10/2031	$4,000.00

This project should be accepted True / False