Mr. Don is the director of A-Design Inc., a federally incorporated company in Canada, specializing in the design and manufacturing of armrests for the wheelchair industry. A-Design invested $100,000 in a production machine, which has a useful life of 10 years, and put $10,000 in its bank account. In an attempt to improve company sales and profits, Mr. Don planned to offer two purchasing options to the clients of his company: Option 1: A $250 deposit upfront and a $500 yearly fee for the following 5 years Option 2: A $1,300 deposit upfront and a $300 yearly fee for the following 3 years 1. Assuming an interest rate of 5% per year over a period of 5 years on the money put in the bank, how much will A-Design have in its bank account at the end of the first year? 2. Assuming an interest rate of 5% per year over a period of 5 years on the money put in the bank, calculate the simple interest and the compound interest earned by A-Design at the end of the fifth year? 3. Assuming an interest rate of 5% per year compounded every 6 months over a period of 5 years on the money put in the bank, how much will A-Design have in its bank account at the end of the fifth year? 4. Assuming an interest rate of 5% per year compounded monthly over a period of 5 years on the money put in the bank, how much will A-Design have in its bank account at the end of the fifth year? 5. Do a discounted cash flow analysis and determine the best option offered by Mr. Don to his clients, assuming a 10 % per year compound interest rate. 6. Calculate the depreciated cost per year of the machine. Mr. Don is the director of A-Design Inc., a federally incorporated company in Canada, specializing in the design and manufacturing of armrests for the wheelchair industry. A-Design invested $100,000 in a production machine, which has a useful life of 10 years, and put $10,000 in its bank account. In an attempt to improve company sales and profits, Mr. Don planned to offer two purchasing options to the clients of his company: Option 1: A $250 deposit upfront and a $500 yearly fee for the following 5 years Option 2: A $1,300 deposit upfront and a $300 yearly fee for the following 3 years 1. Assuming an interest rate of 5% per year over a period of 5 years on the money put in the bank, how much will A-Design have in its bank account at the end of the first year? 2. Assuming an interest rate of 5% per year over a period of 5 years on the money put in the bank, calculate the simple interest and the compound interest earned by A-Design at the end of the fifth year? 3. Assuming an interest rate of 5% per year compounded every 6 months over a period of 5 years on the money put in the bank, how much will A-Design have in its bank account at the end of the fifth year? 4. Assuming an interest rate of 5% per year compounded monthly over a period of 5 years on the money put in the bank, how much will A-Design have in its bank account at the end of the fifth year? 5. Do a discounted cash flow analysis and determine the best option offered by Mr. Don to his clients, assuming a 10 % per year compound interest rate. 6. Calculate the depreciated cost per year of the machine
