Part B: Solve the following excersises: 1) Consider the following timeline where the firm requires the annuity to provide a minimum return of .....%. (write any number for interest rate): Project A End of Year O 2. 3 -50,000 15,000 15,000 15,000 15,000 Calculate Future Value (FV) using two methods (Timeline and Equation) and compare the answers. 2) Consider the following timeline where the firm requires the annuity to provide a minimum return of 20%.: Project A o End of Year 3 2 1 ? -100,000 15,000 20,000 ? 30,000 Calculate Net Present Value (NPV) (Write any number for year 3) 3) Calculate return for the following assets and write which asset is better? a) The stock price for Stock A was $100 per share 1 year ago. The stock is currently trading at $95 per share and shareholders just received a $10 dividend. What return was earned over the past year? b) The stock price for Stock was $ 100 per share 1 year ago. The stock is currently trading at $105 per share and shareholders just received a $5 dividend. What return was earned over the past year? 4) Ali is a manufacturer and he wants to choose the better of two a investments, X, Y and Z. Each requires an initial outlay of OR 20,000 and each has a most likely annual rate of return of 10%. Management has made pessimistic and optimistic estimates of the returns associated with each. The three estimates for each assets, along with its range, is given in the following Table. Which asset do you use? Why? (write for Most likely). Annual rate of return Asset X Asset Y Asset Z Pessimistic 12% 11% 10 % Most likely ? ? ? Optimistic 24% 25% 26% =

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