finance problems………….
Downside #1Lugar Industries is contemplating an funding in a brand new machine with the next data:Machine price 225,000Setup price 25,000Salvage worth 50,000Life 5 yearsNet working expense financial savings:Finish of 12 months 1 $ 50,000Finish of 12 months 2 $ 90,000Finish of 12 months three $110,000Finish of 12 months four $120,000Finish of 12 months 5 $120,000WACC 10%Tax fee 40%Assumed worth of the machineat finish of 5 years is $50,000If Lugar buys the machine, calculate the next:a. Payback Interval. Enter you reply and carry it out two decimal locations. (For instance a 2 12 months payback is entered as 2.00)b. Discounted Payback Interval. Enter you reply and carry it out two decimal locations. (For instance a 2 12 months discounted payback will likely be entered as 2.00)c. Calculate the NPV. Spherical you reply to the closest entire quantity. Don't use $, commas, or decimal factors) (For instance, $34,567.50 can be entered as 34568.d. Based mostly on the above data, calculate the IRR. Spherical you reply to the closest two decimal locations. Don't use %) (For instance, 34.4550% can be entered as 34.46.e. Based mostly in your calculations, ought to Lugar purchase the machine?A) YesB) NoProblem #2How a lot would an individual have to put money into a retirement account annually based mostly on the next assumptions to achieve their retirement objective:Present Age of Individual 55Present Retirement Account Steadiness $250,000Years to Retirement 10*Retirement Revenue in Today’s $60,000Common Inflation Charge 4percentYears of Retirement Revenue Desired 15Pre-Retirement Account Curiosity Earnings Charge 9percentAfter Retirement Account Curiosity Earnings Charge 7%(*Assume the primary retirement cost is on the market instantly upon retirement on the finish of 12 months 10. Yearly quantity of financial savings. Spherical you reply to the closest entire quantity. Don't use $, commas, or decimal factors and enter as a optimistic quantity. For instance, $34,567.50 can be entered as 34568.)Downside #3For this query solely, assume that you're residing within the U.S. and the financial system has been doing nicely for the previous four years. This isn't the case proper now however hopefully we'll expertise this within the close to future once more. Assume the next data relating to the financial system:Present Unemployment Charge 5percentGDP development fee for previous four years three.2% averageCurrent Fed Funds Charge four.5percentCurrent 30 12 months Mortgage Charge 7percentStock Market Historic HighsInflation fee for the previous four years three.5% averagea. In case you are invested primarily in shares versus bonds, why may a recession harm your funding portfolio? Clarify your reply.b. If you don't count on a recession for no less than 2 extra years however count on an annual 5% inflation fee for every of the subsequent two years, would you slightly be invested within the inventory market or the bond market? Base your reply solely on the influence of rate of interest change. Clarify.Downside #4The behavior of spending a month-to-month sum of money has each a web current worth influence and a future worth influence. Assume you've gotten been requested to point out a 20 12 months outdated who's at the moment spending $1,800 a 12 months on cigarettes the monetary influence of this behavior. Don't deal with the well being points and even the potential well being prices. Simply present the influence of this behavior on a NPV foundation and a Future Worth foundation. Use the next assumptions to assist in your calculations:Common Inflation fee for the price of cigarettes 5percentUse a 20 12 months time interval and compound yearly.Assume a reduction fee of seven% for NPV and seven% for the potential earnings if these are invested as an alternative of used to buy cigarettes.