Fraser Company will need a new warehouse in eight years. The warehouse will cost $490,000 to build.

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.

Required:

What lump-sum amount should the company invest now to have the $490,000 available at the end of the eight-year period? Assume that the company can invest money at: (Round your final answer to the nearest whole dollar amount.)

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 won the weeks grand prize totaling $1.02 million. The State Lottery Commission indicated that Mr. Ormsby will receive his prize in 20 annual installments of $51,000 each.

Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.

Required:

1. If Mr. Ormsby can invest money at a 7% rate of return, what is the present value of his winnings? (Enter your answer in dollars and not in millions of dollars.)