Global Financial Management
Delivery length (excel spreadsheet)
The Acme Company has its European subsidiary based in the Euro zone. The subsidiary must solve a series of five problems that require you to apply the concept of “time value of money,” or TVM. The five problems are listed below. Solving them will require the use of Microsoft Excel. Before you begin your work, each student is to select a unique nine-digit random number that contains no zeros, no “patterns,” and should use most of the digits between one and nine. This value will be referred to as the student unique number (SUN). Further, digits within the SUN are read from left to right. For example, if the SUN = 123456789, the first digit = 1, the second digit = 2, etc. You are not authorized to use 123456789. To generate a random whole number between 1 and 9, use this excel formula:
=round(8*rand(),0)+1
When you have generated these 9 digits, paste them back onto themselves using the Paste Values option of the Paste command. Please note that the interest rate used in all questions represents an annual rate and all Euro figures are in whole Euros (not Euros and cents).
Acme plans to construct a new manufacturing facility in 14 years. If Acme estimates that today’s cost of the new plant is SUN Euros (use all 9 digits) and annual inflation is A% (A = the first digit of SUN), how much will the manufacturing plant cost in 14 years? Give a detailed explanation on your calculations.
Acme has decided to establish a sinking fund for its outstanding preferred stock issue. SUN (use all 9 digits) represents the amount of the issue that will be retired in 26 years. At the beginning of each of these 26 years, Acme will deposit an equal amount into an account that earns B% (B = the second digit of SUN). What is the value of this periodic deposit? Give a detailed explanation on your calculations.
One of Acme’s new projects will generate the following cash flows at the end of each of the stated years: year 2 =…