ACCT 301 Week 7 – Homework Assignment

ACCT 301 Week 7 – Homework Assignment


Week 7 – Homework Assignment

Magnum Corporation is considering the purchase of a new business that will increase


their annual cash flows by $50,000 per year for 8 years. The business will cost

$140,000 and the current market rate of interest is 6%.


Use the Present Value tables or Excel to answer the following questions.




What is the Net Present Valueof the above business?  (10 points)



Should the Magnum Corporation purchase the new business based upon the results of

the NPV method?  Why?  Why not? (10 points)



  1. What is the Present Value Index for the business that Magnum is thinking


about purchasing?  (5 points)


  1. What is the Payback period for the purchase of the new business? (10 points)


  1. Briefly describe the Net Present Value Method of Capital Budgeting. (5 points)




  1. Roberto just graduated from college and he is currently earning $45,000


per year.  Roberto has decided that he would like to begin investing 15% of


his annual salary into his 401K plan at work for the next 40 years.


Roberto plans to invest his 401K retirement funds into a mutual fund of


stocks and bonds that is expected to earn 8% into the foreseeable future.


Roberto is not planning on taking any money out of his retirement account


until he retires.   (10 points)




What amount will Roberto have in his 401K Retirement account when he retires in 40 years?




How much money will Roberto have earned in his retirement account after 40 years?



Place an Order

We do custom work 100% original and plagiarism free .If you need help in any assignment just send us requirements with time limit ,we will quote a price and after your confirmation ,we start working on your assignment. An original work ready for submission provided to you
  • Drop files here or
  • This field is for validation purposes and should be left unchanged.