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CORPORATE FINANCE
72-HOUR ASSIGNMENT
Note:
- This assignment covers session 4 – Discounted Cash Flows Valuation.
- Cover sheet and peer review form must be attached.
Question 1 [8 marks]
Today, You are going to sign a 5-year contract to rent an apartment that requests an annual
payment of $20,000 per year. The contract will be implemented early next year, so you will need
to withdraw the first $20,000 one year from today. Your family plans to deposit in a bank saving
account with a 10 percent interest rate ansd expect that amount to be able to satisfy a full
payment schedule. The deposit will be made today.
a. How large must the deposit be? [4 marks]
b. How much will be in the account immediately after you make the first withdrawal? After the
last withdrawal? [4 marks]
Question 2 [6 marks]
You have $20,000 to invest for 10 years.
a. How much additional interest will you earn if the investment provides a 10% annual return,
compared to a 8% annual return? [2 marks]
b. How long will it take your $20,000 to double in value if it earns 10% annually? [2 marks]
c. What annual rate has been earned if $5,000 grows into $8,000 in 10 years? [2 marks]
Question 3 [6 marks]
As winner of a Mathematics competition, you can choose one of the following prizes:
a. $100,000 now.
b. $180,000 at the end of five years.
c. $11,400 a year forever.
d. $19,000 for each of 10 years.
e. $6,500 next year and increasing thereafter by 5% a year forever.
If the interest rate is 12%, which is the most valuable prize? (Note: You will need to find the
present value of each option and compare).
This study source was downloaded by 1827175 from cliffsnotes.com on 01-08-2026 19:49:07 GMT -06:00
https://www.cliffsnotes.com//study-notes/4863399
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AMAssignment_1.pdf(*((&#*!(*#*($$(*($(*$Y(&*&$(*)&*)((&$*^$&*&$
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Page
Page11ofof110/13/2026,
110/13/2026,
1 of 110/13/2026,
1:58:15
1:58:15
1:58:15
AMAssignment_1.pdf(*((&#*!(*#*($$(*($(*$Y(&*&$(*)&*)((&$*^$&*&$
AMAssignment_1.pdf(*((&#*!(*#*($$(*($(*$Y(&*&$(*)&*)((&$*^$&*&$
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VJyvhjbnoP+_IREOLKDJ(UWRORWUOI
**F VJyvhjbnoP+_IREOLKDJ(UWRORWUOI
CORPORATE FINANCE
72-HOUR ASSIGNMENT
Note:
- This assignment covers session 4 – Discounted Cash Flows Valuation.
- Cover sheet and peer review form must be attached.
Question 1 [8 marks]
Today, You are going to sign a 5-year contract to rent an apartment that requests an annual
payment of $20,000 per year. The contract will be implemented early next year, so you will need
to withdraw the first $20,000 one year from today. Your family plans to deposit in a bank saving
account with a 10 percent interest rate ansd expect that amount to be able to satisfy a full
payment schedule. The deposit will be made today.
a. How large must the deposit be? [4 marks]
b. How much will be in the account immediately after you make the first withdrawal? After the
last withdrawal? [4 marks]
Question 2 [6 marks]
You have $20,000 to invest for 10 years.
a. How much additional interest will you earn if the investment provides a 10% annual return,
compared to a 8% annual return? [2 marks]
b. How long will it take your $20,000 to double in value if it earns 10% annually? [2 marks]
c. What annual rate has been earned if $5,000 grows into $8,000 in 10 years? [2 marks]
Question 3 [6 marks]
As winner of a Mathematics competition, you can choose one of the following prizes:
a. $100,000 now.
b. $180,000 at the end of five years.
c. $11,400 a year forever.
d. $19,000 for each of 10 years.
e. $6,500 next year and increasing thereafter by 5% a year forever.
If the interest rate is 12%, which is the most valuable prize? (Note: You will need to find the
present value of each option and compare).
This study source was downloaded by 1827175 from cliffsnotes.com on 01-08-2026 19:49:07 GMT -06:00
https://www.cliffsnotes.com//study-notes/4863399
Page
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Page 111of
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of110/13/2026,
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AMAssignment_1.pdf(*((&#*!(*#*($$(*($(*$Y(&*&$(*)&*)((&$*^$&*&$
AMAssignment_1.pdf(*((&#*!(*#*($$(*($(*$Y(&*&$(*)&*)((&$*^$&*&$(&*$
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