Question

please write in text not in handwriting since its hard to read from a paper pic and i need an explanation for each problem thank you

1 SONY needs $24,034,142 for a new sound studio facility to be constructed 10 years from now. The company currently has $5,000,000 to invest in such capital expenditures. At what rate of interest must it invest the $5,000,000 to fund construction of the new facility? (Round to the nearest whole percentage

2. Suppose Merck & Co., Inc. decided to restructure the final development plans surrounding its new research and development facility for completion in 12 years from now. The company has decided to deposit into its Citicorp account $1,924,647, earning 8% annually, at the end of the fourth through 12^th years from today. What value would Merck & Co., Inc. have accumulated at the end of the 12^th year?

Answer 1

1)RATE =17%

2)depositing $1,924,647 from 4th year end to 12 end year end

no of deposits=12-4=8

12 th year deposted at the end so interest will not received net period (8-1)7 year

value at 12 the year end =annunity*pvaf(%, n years)

=$1,924,647*PVAF(8%,7)+$1,924,647 (12 th year deposit)

=1924647*5.2064+1924647

=$11,945,129.14

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