A. Sunland Corporation wants to withdraw $130,390 (including principal) from an investment fund at the end of each year for 9 years. What should be the required initial investment at the beginning of the first year if the fund earns 11%? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Required initial investment

$enter the required initial investment in dollars

b. Monty Inc. manufactures cycling equipment. Recently, the vice president of operations of the company has requested construction of a new plant to meet the increasing demand for the companys bikes. After a careful evaluation of the request, the board of directors has decided to raise funds for the new plant by issuing $3,454,800 of 11% term corporate bonds on March 1, 2020, due on March 1, 2035, with interest payable each March 1 and September 1, with the first interest payment on September 1st, 2020. At the time of issuance, the market interest rate for similar financial instruments is 10%. As the controller of the company, determine the selling price of the bonds. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Selling price of the bonds

Tonys Lawn Equipment sells high-quality lawn mowers and offers a 3-year warranty on all new lawn mowers sold. In 2020, Tony sold $307,300 of new specialty mowers for golf greens for which Tonys service department does not have the equipment to do the service. Tony has entered into an agreement with Mower Mavens to provide all warranty service on the special mowers sold in 2020. Tony wishes to measure the fair value of the agreement to determine the warranty liability for sales made in 2020. The controller for Tonys Lawn Equipment estimates the following expected warranty cash outflows associated with the mowers sold in 2020.

Year		Cash Flow Estimate			Probability Assessment
2021		$2,550			20%
		3,990			60%
		5,430			20%
2022		$3,180			30%
		5,440			50%
		6,530			20%
2023		$3,750			30%
		5,610			40%
		6,980			30%

C. Using expected cash flow and present value techniques, determine the value of the warranty liability for the 2020 sales. Use an annual discount rate of 6%. Assume all cash flows occur at the end of the year. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

The value of the warranty liability for the 2020 sales

$

Cullumber Mining Company recently purchased a quartz mine that it intends to work for the next 10 years. According to state environmental laws, Cullumber must restore the mine site to its original natural prairie state after it ceases mining operations at the site. To properly account for the mine, Cullumber must estimate the fair value of this asset retirement obligation. This amount will be recorded as a liability and added to the value of the mine on Cullumbers books. There is no active market for retirement obligations such as these, but Cullumber has developed the following cash flow estimates based on its prior experience in mining-site restoration. It will take 3 years to restore the mine site when mining operations cease in 10 years. Each estimated cash outflow reflects an annual payment at the end of each year of the 3-year restoration period.

Restoration Estimated Cash Outflow			Probability Assessment
$13,710			10%
21,590			30%
23,180			50%
31,480			10%

E. What is the estimated fair value of Cullumbers asset retirement obligation? Cullumber determines that the appropriate discount rate for this estimation is 5%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

Estimated fair value of Cullumbers asset retirement obligation

$