**Purpose of Assignment**

The purpose of this assignment is to allow the student to calculate the project cash flow using net present value (NPV), internal rate of return (IRR), and the payback methods.

**Assignment Steps**** **

**Resources****:** *Corporate Finance*

**STEP 1 (SUBMIT AS A WORD DOCUMENT IN MEMO FORMAT)**

**Create** a 350-word memo to management including the following:

- Describe the use of internal rate of return (IRR), net present value (NPV), and the payback method in evaluating project cash flows.
- Describe the advantages and disadvantages of each method.

** Minimum **required reference includes your textbook.

**STEP 2 (SUBMIT AS AN EXCEL SPREADSHEET)**

**Calculate **the following time value of money problems using Microsoft^{®} Excel^{®}: :

- If you want to accumulate $500,000 in 20 years, how much do you need to deposit today that pays an interest rate of 15%?
- What is the future value if you plan to invest $200,000 for 5 years and the interest rate is 5%?
- What is the interest rate for an initial investment of $100,000 to grow to $300,000 in 10 years?
- If your company purchases an annuity that will pay $50,000/year for 10 years at a 11% discount rate, what is the value of the annuity on the purchase date if the first annuity payment is made on the date of purchase?
- What is the rate of return required to accumulate $400,000 if you invest $10,000 per year for 20 years. Assume all payments are made at the end of the period.
- What is
- What is the payback period for Project A and Project B using the payback method? Which would you choose and why?

Project A and Project B: