Draw a time line to show the cash flows of the project

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Reference no: EM13829212

Instruction:

1.You are expected to show your working process and discuss your findings in details.

You need to work on the mini-projects in Excel. Your final mini-project report should be well-organized and typed in a WORD file. Please submit both your WORD report and Excel files.

Mini-Project 1: Mortgage Loan Analysis: Mr. Johnson plans to buy a new house at Bean Town in September 2014. The sale price of the house is $366,000. He is going to pay 20% down payments and borrow additional 80% from Wells Fargo with a 20-year, 3.875% fixed-rate mortgage loan. He is expected to pay an equal MONTHLY payment starting from October 2014 for a total of 20 years.

(1) Calculate the required monthly mortgage payment for Mr. Johnson.

(2) Construct the 2014~2020 amortization table for Mr. Johnson.

(1)Mr. Johnson should prepare his 2014 tax filings in early 2015. Estimate the total mortgage interest payments that he can use for his 2014 tax deduction.

Mini-Project 2: Capital Budgeting Analysis: The CS HighTech is planning a new investment project which is expected to yield cash inflows of $335,000 per year in Years 1 through 5, $266,000 per year in Years 6 through 9, and $218,000 in Years 10 through 15. This investment will cost the company $2,500,000 today (initial outlay). We assume that the firm's cost of capital is 8.5%.

(1) Draw a time line to show the cash flows of the project.

(2) Compute the project's payback period, net present value (NPV), profitability index (PI), internal rate of return (IRR), and modified internal rate of return (MIRR).

(3) Discuss whether the project should be taken.

Reference no: EM13829212

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