Please read Chapter 5 of Hillier et al (2021) Fundamentals of Corporate Finance andanswer the following questions. You should submit your homework to your class teachervia the corresponding moodle link. Be prepared to participate in class!1. Oasis Pods has been working on a new sustainable business that uses plastic waste to createstandard office pods that can be placed in free spaces in a building. The new office podtechnology has now been cleared for manufacture and development. Oasis Pods anticipatesthe first annual cash flow from the office pods to be €2,000,000, received 2 years fromtoday. Subsequent annual cash flows will grow at 10% in perpetuity. What is the presentvalue of the new technology if the discount rate is 16%?2. The Coop Bank charges 13.2% compounded monthly on its business loans. First Direct Bankcharges 13.5% compounded semi-annually. As a potential borrower, which bank would youchoose for a new loan?3. A 25-year fixed-rate mortgage has monthly payments of €717 per month and a mortgage interestrate of 6.14% per year compounded monthly. If a buyer purchases a home with the cash proceeds ofthe mortgage loan plus an additional 20% deposit, what is the purchase price of the home? Assumethat the additional deposit amount is 20% of the mortgage loan amount.4. Challenge question: You are planning to save for retirement over the next 40 years. To do this, youwill invest £1,000 a month in a share account and £1,000 a month in a bond account. The return ofthe share account is expected to be 6%, and the bond account will pay 2%. When you retire, you willcombine your money into an account with a 5% annual return. How much can you withdraw eachmonth from your account, assuming a 25-year withdrawal period?Hint: To calculate your accumulated wealth (FV) in 40 years you may find it easier to first calculatethe present value (PV) of your monthly investments (using the annuity formula) and then compoundthe PV over 40 years.

“Since you have posted multiple questions, we will provide the solution only to the first question…

1. Oasis Pods has been working on a new sustainable business that uses plastic waste to create standard office pods that can be placed in free spaces in a building. The new office pod technology has now been cleared for manufacture and development. Oasis Pods anticipates the first annual cash flow from the office pods to be €2,000,000, received 2 years from today. Subsequent annual cash flows will grow at 10% in perpetuity. What is the present value of the new technology if the discount rate is 16%?

1. Oasis Pods has been working on a new sustainable business that uses plastic waste to create standard office pods that can be placed in free spaces in a building. The new office pod technology has now been cleared for manufacture and development. Oasis Pods anticipates the first annual cash flow from the office pods to be €2,000,000, received 2 years from today. Subsequent annual cash flows will grow at 10% in perpetuity. What is the present value of the new technology if the discount rate is 16%?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter1: Introduction To Managerial Accounting

Section: Chapter Questions

Problem 15E: Ethical Behavior Consider the following scenario between Dave, a printer, and Steve, an assistant in...

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