Sherryse H. answered • 09/10/14

Tutor

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Accounting, Income Tax, Excel

... Excel has Financial functions to calculate answers for : Net present value (NPV), Future Value (FV), Internal Rate of Return (IRR) ... Cash Flows (CF)

Q1, Q2

… What does each CF represent : is it money received or money paid out? .... Interest is not paid or compounded on a 'zero' balance …. e.g years 1-3 … there is not enough information to make a determination …

Q3

1) ..determine total sum of CFs : 40 annual payments of $65,089

… What does each CF represent : is it money received or money paid out? .... Interest is not paid or compounded on a 'zero' balance …. e.g years 1-3 … there is not enough information to make a determination …

Q3

1) ..determine total sum of CFs : 40 annual payments of $65,089

2) ..using sum determined, calculate the discounted NPV of a lump sum 'savings' amount needed on deposit in the first year of 40 annual payments, using 8.7% interest

3) ..using amount calculatd in step 2, you can determine the discounted NPV lump sum deposit for year one, of the first 35 years before the start of $65,089 annual payments, using 8.7% interest accumlating over 35 years. You can also determine monthly, quarterly, semi annual or annual payments accumlating over 35 years using a 8.7% interest ...

4) ..using amount calculated in step 2, you can determine the discounted NPV lump sum deposit for year one, of the first 36 years before the start of $65,089 annual payments, using 8.7% interest accumlating over 36 years. You can also determine monthly, quarterly, semi annual or annual payments accumlating over 36 years using a 8.7% interest ...

Q4

is it a lifetime annuity? Tax laws apply …