Teal Inc., a manufacturer of steel school lockers, plans to purchase a new punch press for use in its manufacturing process. After contacting the appropriate vendors, the purchasing department received differing terms and options from each vendor. The Engineering Department has determined that each vendors punch press is substantially identical and each has a useful life of 20 years. In addition, Engineering has estimated that required year-end maintenance costs will be $1,030 per year for the first 5 years, $2,030 per year for the next 10 years, and $3,030 per year for the last 5 years. Following is each vendors sales package. Vendor A: $58,000 cash at time of delivery and 10 year-end payments of $16,360 each. Vendor A offers all its customers the right to purchase at the time of sale a separate 20-year maintenance service contract, under which Vendor A will perform all year-end maintenance at a one-time initial cost of $9,640. Vendor B: Forty semiannual payments of $9,120 each, with the first installment due upon delivery. Vendor B will perform all year-end maintenance for the next 20 years at no extra charge. Vendor C: Full cash price of $158,000 will be due upon delivery. Assuming that both Vendors A and B will be able to perform the required year-end maintenance, that Teals cost of funds is 10%, and the machine will be purchased on January 1, compute the following: Click here to view factor tables The present value of the cash flows for vendor A. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

The present value of the cash outflows for this option is $

The present value of the cash flows for vendor B. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

The present value of the cash outflows for this option is $

The present value of the cash flows for vendor C. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

The present value of the cash outflows for this option is $

From which vendor should the press be purchased?

The press should be purchased from Vendor CVendor BVendor A

You have been hired as a benefit consultant by Jean Honore, the owner of Splish Angels. She wants to establish a retirement plan for herself and her three employees. Jean has provided the following information. The retirement plan is to be based upon annual salary for the last year before retirement and is to provide 50% of Jeans last-year annual salary and 40% of the last-year annual salary for each employee. The plan will make annual payments at the beginning of each year for 20 years from the date of retirement. Jean wishes to fund the plan by making 15 annual deposits beginning January 1, 2020. Invested funds will earn 10% compounded annually. Information about plan participants as of January 1, 2020, is as follows. Jean Honore, owner: Current annual salary of $51,520; estimated retirement date January 1, 2045. Colin Davis, flower arranger: Current annual salary of $37,900; estimated retirement date January 1, 2050. Anita Baker, sales clerk: Current annual salary of $19,110; estimated retirement date January 1, 2040. Gavin Bryars, part-time bookkeeper: Current annual salary of $17,690; estimated retirement date January 1, 2035. In the past, Jean has given herself and each employee a year-end salary increase of 4%. Jean plans to continue this policy in the future.

Click here to view factor tables Based upon the above information, what will be the annual retirement benefit for each plan participant? (Hint: Jean will receive raises for 24 years.) (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

		Annual Retirement Benefit
Jean Honore		$
Colin Davis		$
Anita Baker		$
Gavin Bryars		$

eTextbook and Media

Click here to view factor tables What amount must be on deposit at the end of 15 years to ensure that all benefits will be paid? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

The amount must be on deposit

$

eTextbook and Media

Click here to view factor tables What is the amount of each annual deposit Jean must make to the retirement plan? (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 458,581.)

The amount of each annual deposit

$