Unit 1 Project Finance

"PART 1 "a "PMT "11000 "I "0 "n "10 "PVA "-84939 .29 "b "PV "-33000 "I "0 "n "8 "FV "56700 .34 "c "First , we need to calculate the Future Value (FV ) of 1 ,500 "PV "-1500 "I "0 "n "3 "FV "1786 .524 "Amount required "8213 .476 "Rate "0 "Period "3 "FV "8213 .476 "Annual payment "2579 .968 "PART 2 "1 "In the current downward trend in the economy the losing of job is not very unlikely . Mr . Helms accumulated and combined monthly income is 5 ,000 . Generally , ample cash is available to around 4 to 5 months monthly

income . In a situation of job lost , they should require the liquidity of at least 3 months . Financial distress and problem arises if both lose their job . As a result 9 ,500 is not adequate enough for Helms . Moreover , their earning is around 5 ,000 per month and total saving is 9 ,500 which gave a slight indication that their expenditure is almost equal to the generated income means at breakeven level . At this juncture , Helms should require a liquid balance of around the three months salary "2 "The main advantages and pros of CDs are stated below (a ) CDs are much safer in comparison with the investment in the stock market (b ) CDs pay higher return or high rate of interest in contrast with the Helms current saving account "CDs are not liquid like the checking account . Initial detachment from CDs attracts penalization . In addition...