3.

4.

5.

Fraser Company will need a new warehouse in three years. The warehouse will cost $360,000 to build. Use Excel or a financial calculator to solve. Round answers to the nearest dollar. Required: 1. What lump-sum amount should the company invest now to have the $360,000 available at the end of the three-year period? Assume that the company can invest money at six percent. Amount to be Invested 2. What lump-sum amount should the company invest now to have the $360,000 available at the end of the three-year period? Assume that the company can invest money at ten percent. Amount to be Invested The Atlantic Medical Clinic can purchase a new computer system that will save $4,000 annually in billing costs. The computer system will last for twelve years and have no salvage value. Use Excel or a financial calculator to solve. Round answers to the nearest dollar. Required: Up to how much should the Atlantic Medical Clinic be willing to pay for the new computer system if the clinic's required rate of return is: Present Value 1. Eight percent 2. Twelve percent Annual cash inflows that will arise from two competing investment projects are given below: Year 1 2. 3 4 Investment A Investment B $ 9,000 $12,000 10,000 11,000 11,000 10,000 12,000 9,000 Total $42,000 $42,000 The discount rate is 6%. Use Excel or a financial calculator to solve the homework. Round answers to the nearest dollar. Required: Compute the present value of the cash inflows for each investment. Each investment opportunity will require the same initial investment. Present Value of Cash Flows Investment Investment B The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the state's newest millionaire. By choosing the six winning numbers on last week's state lottery, Mr. Ormsby has won the week's grand prize totaling $1.48 million. The State Lottery Commission has indicated that Mr. Ormsby will receive his prize in 20 annual installments of $74,000 each. Use Excel or a financial calculator to solve. Round answers to the nearest dollar. Required: 1. If Mr. Ormsby can invest money at a 9% rate of return, what is the present value of his winnings? Present Value