Subject: Business / FinancePurpose of AssignmentThe purpose of this assignment is to allow the student to calculate the project cash flow using netpresent value (NPV), internal rate of return (IRR), and the payback methods.Assignment StepsResources: Corporate FinanceCreate a 350-word memo to management including the following: Describe the use of internal rate of return (IRR), net present value (NPV), and the paybackmethod in evaluating project cash flows. Describe the advantages and disadvantages of each method. Calculate the following time value of money problems:1. If you want to accumulate $500,000 in 20 years, how much do you need to deposit todaythat pays an interest rate of 15%?2. What is the future value if you plan to invest $200,000 for 5 years and the interest rate is5%?3. What is the interest rate for an initial investment of $100,000 to grow to $300,000 in 10years?4. If your company purchases an annuity that will pay $50,000/year for 10 years at a 11%discount rate, what is the value of the annuity on the purchase date if the first annuitypayment is made on the date of purchase?5. What is the rate of return required to accumulate $400,000 if you invest $10,000 per year for20 years. Assume all payments are made at the end of the period.Calculate the project cash flow generated for Project A and Project B using the NPV method. Which project would you select, and why? Which project would you select under the payback method? The discount rate is 10% forboth projects. Use Microsoft® Excel® to prepare your answer. Note that a similar problem isin the textbook in Section 5.1. Sample Template for Project A andProject B: Show all work.Submit the memo and all calcluations.
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