# BUSM4160 Managerial Finance Proof Reading and Editing Services

### BUSM4160 Managerial Finance Proof Reading and Editing Services

 Particulars Amount Fund Required in Future A \$ 100,000.00 Period (in years) B 10 Fixed Interest Rate p.a. C 3% Compounding Period per year D 1 Fund Required in Present E=PV(C,(BxD),0,-A,0) \$ 74,409.39 Formula =PV(C7,(C6*C8),0,-C5,0)

The above table shows the computation considering the rate of interest and the fund which needs to be deposited today is shown to be \$ 74,409.39.

### The answer to Question 2

 Particulars Amount Retirement Age A 65 Current Age B 25 Total Period of Savings C=A-B 40 Yearly Deposit D \$ 5,000.00 Compounding Period p.a. E 1 Annual Interest Rate p.a. F 8% Accumulated Fund on Retirement G=FV(F,(CxE),-D,0,0) \$ 1,295,282.59

The accumulated savings in retirement fund will be \$ 1,295,282.59 if the individual starts savings from the age 25 years.

 Particulars Amount Retirement Age A 65 Current Age B 35 Total Period of Savings C=A-B 30 Yearly Deposit D \$ 5,000.00 Compounding Period p.a. E 1 Annual Interest Rate p.a. F 8% Accumulated Fund on Retirement G=FV(F,(CxE),-D,0,0) \$ 566,416.06

The accumulated fund on retirement will be \$ 566,416.06 if the individual starts saving from the age of 35.

### The answer to Question 3

 Particulars Amount Expected Life (in years) A 100 Retirement Age B 65 Total years of living after retirement C=A-B 35 Annual Requirement after retirement D \$ 100,000.00 Interest rate p.a. E 7% Compounding period F 1 Fund required at the time of Retirement G=PV(E,(CxF),-D,0,0) \$ 1,294,767.23 Current Age H 30 Total years upto retirement I=B-H 35 Annual Deposit J=PMT(E,(IxF),0,-G,0) \$ 9,366.29

As per the plan of the individual, the plan is to contribute to a fund which can provided appropriate funds to the business when the person retires. The plan of the individual is to retire at the age of 65. The annual deposit which the person needs to save is computed to be \$ 9,366.29.

### Part a

 Particulars Amount Annual Payment of Mortgage A \$ 12,000.00 Total Years B 30 Compounding Period C 1 Interest Rate per year D 6% Amount of Orginal Loan E=PV(D,(BxC),-A,0,0) \$ 165,177.97

The amount of original loan which is computed is shown in the above table and the same is shown to be \$ 165,177.97.

### Amortization Schedule:

 Year Opening Balance Interest Rate Interest Amount Annual Payment Prinicipal Payment Closing Balance A B C=AxB D E=D-C F=A-E 1 \$ 165,177.97 6% \$ 9,910.68 \$ 12,000.00 \$ 2,089.32 \$ 163,088.65 2 \$ 163,088.65 6% \$ 9,785.32 \$ 12,000.00 \$ 2,214.68 \$ 160,873.97 3 \$ 160,873.97 6% \$ 9,652.44 \$ 12,000.00 \$ 2,347.56 \$ 158,526.41 4 \$ 158,526.41 6% \$ 9,511.58 \$ 12,000.00 \$ 2,488.42 \$ 156,037.99 5 \$ 156,037.99 6% \$ 9,362.28 \$ 12,000.00 \$ 2,637.72 \$ 153,400.27 6 \$ 153,400.27 6% \$ 9,204.02 \$ 12,000.00 \$ 2,795.98 \$ 150,604.29 7 \$ 150,604.29 6% \$ 9,036.26 \$ 12,000.00 \$ 2,963.74 \$ 147,640.55 8 \$ 147,640.55 6% \$ 8,858.43 \$ 12,000.00 \$ 3,141.57 \$ 144,498.98 9 \$ 144,498.98 6% \$ 8,669.94 \$ 12,000.00 \$ 3,330.06 \$ 141,168.92 10 \$ 141,168.92 6% \$ 8,470.14 \$ 12,000.00 \$ 3,529.86 \$ 137,639.05 11 \$ 137,639.05 6% \$ 8,258.34 \$ 12,000.00 \$ 3,741.66 \$ 133,897.40 12 \$ 133,897.40 6% \$ 8,033.84 \$ 12,000.00 \$ 3,966.16 \$ 129,931.24 13 \$ 129,931.24 6% \$ 7,795.87 \$ 12,000.00 \$ 4,204.13 \$ 125,727.12 14 \$ 125,727.12 6% \$ 7,543.63 \$ 12,000.00 \$ 4,456.37 \$ 121,270.74 15 \$ 121,270.74 6% \$ 7,276.24 \$ 12,000.00 \$ 4,723.76 \$ 116,546.99 16 \$ 116,546.99 6% \$ 6,992.82 \$ 12,000.00 \$ 5,007.18 \$ 111,539.81 17 \$ 111,539.81 6% \$ 6,692.39 \$ 12,000.00 \$ 5,307.61 \$ 106,232.20 18 \$ 106,232.20 6% \$ 6,373.93 \$ 12,000.00 \$ 5,626.07 \$ 100,606.13 19 \$ 100,606.13 6% \$ 6,036.37 \$ 12,000.00 \$ 5,963.63 \$ 94,642.49 20 \$ 94,642.49 6% \$ 5,678.55 \$ 12,000.00 \$ 6,321.45 \$ 88,321.04 21 \$ 88,321.04 6% \$ 5,299.26 \$ 12,000.00 \$ 6,700.74 \$ 81,620.31 22 \$ 81,620.31 6% \$ 4,897.22 \$ 12,000.00 \$ 7,102.78 \$ 74,517.53 23 \$ 74,517.53 6% \$ 4,471.05 \$ 12,000.00 \$ 7,528.95 \$ 66,988.58 24 \$ 66,988.58 6% \$ 4,019.31 \$ 12,000.00 \$ 7,980.69 \$ 59,007.89 25 \$ 59,007.89 6% \$ 3,540.47 \$ 12,000.00 \$ 8,459.53 \$ 50,548.37 26 \$ 50,548.37 6% \$ 3,032.90 \$ 12,000.00 \$ 8,967.10 \$ 41,581.27 27 \$ 41,581.27 6% \$ 2,494.88 \$ 12,000.00 \$ 9,505.12 \$ 32,076.14 28 \$ 32,076.14 6% \$ 1,924.57 \$ 12,000.00 \$ 10,075.43 \$ 22,000.71 29 \$ 22,000.71 6% \$ 1,320.04 \$ 12,000.00 \$ 10,679.96 \$ 11,320.75 30 \$ 11,320.75 6% \$ 679.25 \$ 12,000.00 \$ 11,320.75 \$ 0.00

### Part c & d

As per the schedule which is shown above, the outstanding balance of the business after the first 12 years is shown to be \$ 129,931.24.

 Year Actual Profit Interest Rate Discounted Cash Flow A B C D=B/[(1+C)^A] 1 \$ 2,000,000.00 10% \$ 1,818,181.82 2 \$ 2,100,000.00 10% \$ 1,735,537.19 3 \$ 2,205,000.00 10% \$ 1,656,649.14 4 \$ 2,315,250.00 10% \$ 1,581,346.90 5 \$ 2,431,012.50 10% \$ 1,509,467.50 6 \$ 2,552,563.13 10% \$ 1,440,855.34 7 \$ 2,680,191.28 10% \$ 1,375,361.91 8 \$ 2,814,200.85 10% \$ 1,312,845.46 9 \$ 2,954,910.89 10% \$ 1,253,170.67 10 \$ 3,102,656.43 10% \$ 1,196,208.37 11 \$ 3,257,789.25 10% \$ 1,141,835.26 12 \$ 3,420,678.72 10% \$ 1,089,933.66 13 \$ 3,591,712.65 10% \$ 1,040,391.22 14 \$ 3,771,298.28 10% \$ 993,100.71 15 \$ 3,959,863.20 10% \$ 947,959.77 16 \$ 4,157,856.36 10% \$ 904,870.69 17 \$ 4,365,749.18 10% \$ 863,740.20 Present Value of the Drug \$ 21,861,455.79

The present value of the drug which is computed is shown to be \$ 21,861,455.79 for pharmaceutical company.