Fundamentals of Finance - ASUS Case Study - Finance Assignment Help

Assignment Task:

Assignment question-Answer all questions

Part A 

Excelsior Limited has the intention to purchase a new photocopying machine and has a choice between the following two machines:

The company estimates that its cost of capital is 9%.

Required:

1. Calculate the payback period for both machines: (answers must be expressed in years, months and days) 

2. Calculate the discounted payback period for both machines (answers in years, months and days)

3. Calculate the net present value for both machines: (to the nearest Rupee) 

4. Calculate the Profitability Index for Machine ASUX.

5. Calculate the Internal Rate of Return for both machines (Use interpolation to arrive at your final answer.)

6. Write a brief report to the management to determine whether the company should buy any photocopying machine.

Part  B

1. Mr Bruce deposits Rs 500 every month for 10 years in his savings account paying 8 % interest per annum. He wants to determine how much sum of money he will have at the end of the 10th year if the interest rate is compounded:

i) Annually

ii) Quarterly 

2. Mr Willis would like to save a sum of money for his newborn son’s college education.

How much must he deposit in a savings account now if the account grows at a rate of 7% a year and he desires a balance of Rs1,200,000 eighteen years from now?

Part  C

“Finance is crucial……”

With reference to a business of your choice, evaluate the validity of the above statement.

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