Reference no: EM132569203

Question A. Mr. Umar who is recently graduated from a University wants to run his own business. He has the option of making an investment in new software that will cost $130,000 today and is estimated to provide the savings shown in the following table over its 5-year life:

Years Estimated Savings

1 35,000

2 50,000

3 45,000

4 25,000

5 15,000

You as a finance student required to help him about taking a decision that he make this investment or not if it requires a minimum annual return of 9% on all investments? Your decision should be based on calculations.

Question B. A person borrows $200 to be repaid in 8 years with 14% annually compounded interest. The loan may be repaid at the end of any earlier year with no prepayment penalty. What is the repayment at the end of year 4?

Question C. Zulqarnain, a 25-year-old college graduate, wishes to retire at age 65. To supplement other sources of retirement income, he can deposit $2,000 each year into a tax-deferred individual retirement arrangement (IRA). The IRA will earn a 10% return over the next 40 years. If Zulqarnain makes annual end-of-year $2,000 deposits into the IRA, how much will he have accumulated by the end of his sixty-fifth year?