1. You have to pay $ 1,000 rent at the beginning of each month for 1 year, after which you’ll be going abroad. You want your parents to put in the bank an amount that will cover your rent for the year. The bank pays 6% return compounded monthly. How much money needs to be deposited in the bank?
Please provide an explanation.
2. You purchased a machine at $3,000,000. It will be fully depreciated using straight line depreciation over the next 5 years. There is no maintenance cost or salvage value. The discount rate is 8%.
What is the NPV of your cost (write down the absolute value)? Your tax rate is 30% (Hint: tax rate matters when you discount future cash flows)
Please round up your answer to integer.