Financial Management

Running head: BUSINESS FINANCIAL MANAGEMENT
Financial Management
Name of the Student:
Name of the University:
Author’s Note:

FINANCIAL MANAGEMENT1
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................3
Question 3........................................................................................................................................4
Question 4........................................................................................................................................5
Question 5........................................................................................................................................7
Bibliography....................................................................................................................................8

FINANCIAL MANAGEMENT2
Question 1
a) The present value of a security that will pay $5,000 in 20 years if securities of equal risk pay
7% annually then the same would be as follows:
a) Present
Value
PMT 5000
Time 20
Discount Rate 7%
Present Value
($52,970.
07)
b) Contract Evaluation
Particulars Year 1
Year
2 Year 3
Year
4 NPV
Contract A 55,000
55,00
0 55,000
55,00
0
$174,342
.60
Contract B 55,000
56,00
0 58,000
60,00
0
$180,838
.06
Contract C 80,000
40,00
0 50,000
50,00
0
$177,501
.54
Contract B would be selected based on the higher Net Present Value generated by the Contract.
c) Lottery Prize Evaluation
c) Lottery
Prize
Particulars
Present
Value
Tenur
e
Lump Sum 61mn 1
End Of Year
Payment 9.5 mn 10
End Of Year
Payment 5.5 mn 30
i) 7% annually
Particulars
Present
Value
Tenur
e
Present
Value