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The Atlantic Medical Clinic can purchase a new computer system that will save $5,000 annually in billing costs. The computer system will last for eight
The Atlantic Medical Clinic can purchase a new computer system that will save $5,000 annually in billing costs. The computer system will last for eight years and have no salvage value. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: What is the maximum price (i.e., the price that exactly equals the present value of the annual savings in billing costs) that the Atlantic Medical Clinic should be willing to pay for the new computer system if the clinic's required rate of return is: (Round your final answer to the nearest whole dollar amount.) Maximum Price Twelve 1 percent Thirteen 2 percent The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the state's newest millionaire. By choosing the six winning numbers on last week's state lottery, Mr. Ormsby won the week's grand prize totaling $1.26 million. The State Lottery Commission indicated that Mr. Ormsby will receive his prize in 20 annual installments of $63,000 each Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1. If Mr. Ormsby can invest money at a 12% rate of return, what is the present value of his winnings? (Enter your answer in dollars and not in millions of dollars.) Present value
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