2nd Homework
December 5, 2016
1. What is the amount of regulary pension annuity paid at the end of every
month. The pension plan is proposed for 14 years. You will create the
budget for pension during 21 years with regulary 20-days payments. The
amount of annuity is $100.00 and the anuity is paid at the beginning of
period. Further, you know that a pension fund for the pension anuity will
promised you an interest rate 3 % p. a. and the interest will be calculated
on the monthly basis. During the process of saving you will send the
money on a bank account with interest rate 2.2 % p. a. and the interest
period corresponds to one year.
2. Decide which of the two following projects is better according to NPV,
PB, IRR and MIRR.
Project A: Initial investment 122,000.00, free Cash ow over 3 years
(40,000.00/80,000.00/50,000.00). Project B: Investment costs 45,000.00, free
Cash ow over 5 years (5,000.00/14,000.00/24,000.00/37,000.00/8,000.00). The
capital structure is 60 % for Equity. The cost of equity is 8.6 %, the cost of
debt is 5.4 % and the tax rate is 20 %.
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