Finance Modelling

 Finance Modelling Time Value of Money Assignment 1. Albert is planning on retiring 12 years from today. In that day, he would like to have 500, 000 SAR in the Bank. a) How much money per month does he need to deposit in his savings account to be able to have those 500,000 SAR, assuming the bank pays 8% interest? b) Assume now that Albert is able to save 5,000 SAR every month. How much money will he have in savings account in 12 years? 2. Barbara needs to have 300,000 SAR in the bank 5 years from today, to finance her new a house. a) How much money does Barbara need to deposit in the Bank today, assuming the bank pays 4% annual interest? b) If Barbara only deposits today 200,000 SAR, how much money will she have in the savings account? 3. Charles has a savings account with a balance, today, of 100,000 SAR in his investment account. He expects to obtain a yearly return of 12% in his investments. How long will it take for Charles to have 4 times the balance that he has today in savings account? 4. Diana deposited 3,500 SAR into her retirement plan. After 10 years, Diana has accumulated 840,000 SAR. What was the average annual interest rate earned over the 10 years period? 5. Edward just finished the business plan of his start-up company. According to the projections he carried-out, the initial investment is 1,500,000 SAR (assume that we are in the beginning of 2023), which will be financed by his family (500,000 SAR) and with a bank loan the rest (1,000,000 SAR). The bank loan interest rate is 6% and his family is happy with receiving the same rate of return on the investment. The following table includes Edward’s projections for the cash-flow to be generated in the 5 years, after which Edward plans to sell the company for a market value of 2,000,000 SAR. Cash-flows Year 2023 2024 2025 2026 2027 Terminal Value (2027) 100,000 300,000 400,000 500,000 600,000 2,000,000 a) What is the project’s expected Net Present Value? b) What is the project’s expected Internal Rate of Return?