Annual cash inflows that will arise from two competing investment projects are given below:

Year	Investment A	Investment B
1	$ 3,000	$6,000
2	4,000	5,000
3	5,000	4,000
4	6,000	3,000
Total	$18,000	$18,000

The discount rate is 8%.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

Compute the present value of the cash inflows for each investment. Each investment opportunity will require the same initial investment. (Round discount factor(s) to 3 decimal places.)

In three years, when he is discharged from the Air Force, Steve wants to buy an $32,000 power boat.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:

What lump-sum amount must Steve invest now to have the $32,000 at the end of three years if he can invest money at: (Round discount factor to 3 decimal places.)

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 seven years and have no salvage value

Required:

Up to how much should the Atlantic Medical Clinic be willing to pay for the new computer system if the clinics required rate of return is: (Round discount factor to 3 decimal places.)

The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the states newest millionaire. By choosing the six winning numbers on last weeks state lottery, Mr. Ormsby has won the weeks grand prize totaling $1.46 million. The State Lottery Commission has indicated that Mr. Ormsby will receive his prize in 20 annual installments of $73,000 each.

Required:
1.	If Mr. Ormsby can invest money at a 8% rate of return, what is the present value of his winnings?(Round discount factor to 3 decimal places.)