You are the finance manager for a particular company. The company plans to purchase $2,000,000 in new assembly line machinery in 5 years. (Use Table 11-1 and Table 11-2. Round your answers to the nearest cent.)

(a)

How much (in $) must be set aside now at 8% interest compounded semiannually to accumulate the $2,000,000 in 5 years?

$

(b)

If the inflation rate on this type of equipment is 5% per year, what will be the cost (in $) of the equipment in 5 years, adjusted for inflation?

$

(c)

Use the inflation-adjusted cost of the equipment to calculate how much (in $) must be set aside now.

$

(d)

Use the present value formula to calculate how much (in $) would be required now if you found a bank that offered 8% interest compounded daily to obtain the value found in part b. (Ignore leap years in calculation.)

$

Periods 19 24% 39 64 76 Periods 1 2 3 4 $ 0.99502 0.99X17 0.98SIS 0.98025 0.97537 0.99010 0.98030 0.97059 0.96098 0.95147 0.98522 0.970236 0.95632 0.94218 0.92826 0.98039 0.96117 0.94232 0.92385 0.90573 0.97087 0.94260 0.91514 0.88849 0.86261 0.96154 0.92456 0.88900 0.85480 0.82193 55 0.95238 0.90703 0.86384 0.82270 0.78353 0.94340 0.89000 0.83962 0.79209 0.74726 0.93458 0.87344 0.81630 0.76290 0.71299 8% 0.92593 0.85734 0.79383 0.73503 0.68058 1 2 3 4 $ 6 7 8 9 10 0.97052 0.96569 0.96089 095610 0.95135 0.94205 0.93272 0.92348 0.91434 0.90529 0.91454 0.90103 0.88771 0.87459 0.86167 0.88797 0.87056 0.85349 0.83676 0.82035 0.83748 0.81309 0.78941 0.76642 0.74409 0.79031 0.75992 0.73069 0.70259 0.67556 0.74622 0.71068 0.67684 0.6-1461 0.61391 0.70596 0.66506 0.62741 0.59190 0.55839 0.66634 0.62275 0.58201 0.54393 0.50835 0.63017 0.58349 0.54027 0.50025 0.46319 6 7 8 9 10 11 12 13 0.94661 0.94191 0.93722 0.93256 0.92792 0.89632 0.88745 0.87866 0.86996 0.86135 0.84893 0.83639 0.82403 0.81185 0.79985 0.80426 0.78849 0.77303 0.75788 0.74301 0.72242 0.70138 0.68095 0.66112 0.64186 0.64958 0.62460 0.60057 0.57748 0.35526 0.58468 0.55684 0.53032 0.S0507 0.48102 0.52679 0.49697 0,46884 0.44230 0.41727 0.47509 0.44401 0,41496 0.38782 0.36245 0.42888 0.39711 0.36770 0.34046 0.31524 11 12 13 14 15 15 16 17 18 19 20 0.92330 0.91871 0.91414 0.90959 0.90506 0.85282 0.84438 0.83602 0.82774 0.81954 0.78803 0.77639 0.76491 0.75361 0.74247 0.72845 0.71416 0.70016 0.68643 0.67297 0.62317 0.60502 0.58739 0.57029 0.55368 0.53391 0.51337 0.49263 0.47464 0.45639 0,45811 0.43630 0.41552 0.39573 0.37689 0.39365 0.37136 0.35034 0.33051 0.31180 0.33873 0.31657 0.29586 0.27651 0.25842 0.29189 0.27027 0.25025 0.23171 0.21455 16 17 18 19 20 21 22 23 24 25 0.90056 0.89608 0.89162 0.88719 0.88277 0.81143 0.80340 0.79544 0.78757 0.77977 0.73150 0.72069 0.71004 0.69954 0.68921 0.65978 0.64684 0.63416 0.62172 0,60953 0.53755 0.52189 0.50669 0.49193 0.47761 0.43883 0.42196 0.40573 0.39012 0.37512 0.35894 0.34185 0.32557 0.31007 0.29530 0.29416 0.27751 0.26180 0.24698 0.23300 0.24151 0.22571 0.21095 0.19715 0.18425 0.19866 0.18394 0.17032 0.15770 0.14602 21 22 23 24 25 99% Periods 1 Periods 1 2 3 4 5 0.91743 0.84168 0.77218 0.70843 0.64993 10% 0.90909 0.82645 0.75131 0.68301 0.62092 11% 0.90090 0.81162 0.73119 0.65873 0.59345 12% 0.89286 0.79719 0.71178 0.63552 0.56743 139 0.88496 0.78315 0.69305 0.61332 0.54276 14% 0.87719 0.76947 0.67497 0.59208 0.51937 15% 0.86957 0.75614 0.65752 0.57175 0.49718 165 0.86207 0.74316 0.64006 0.55229 0.47611 17% 0.85470 0.73051 0.62437 0.53365 0.45611 185 0.84746 0.71818 0.60863 0.51579 0.43711 2 3 4 S 6 7 8 9 10 0.59627 0.54703 0.50187 0.46043 0.42241 0.56447 0.51316 0.46651 0.42410 0.38554 0.53464 0.48166 0.43393 0.39092 0.35218 0.5063 0.45235 0.40388 0.36061 0.32197 0.48032 0.42506 0.37616 0.33288 0.29459 0.45559 0.39964 0.35056 0.30751 0.26974 0.43233 0.37594 0.32690 0.28426 0.24718 0.41014 0.35383 0.30503 0.26295 0.22668 0.38984 0.33320 0.28478 0.243:40 0.20804 0.37043 0.31393 0.26604 0.22546 0.19106 6 7 8 9 10 11 12 13 14 IS 0.38753 0.35553 0.32618 0.29925 0.27454 0.35019 0.31863 0.28966 0.26333 0.23939 0.31728 0.28584 0.25751 0.23199 0.20900 0.28748 0.25668 0.22917 0.20462 0.18270 0.26070 0.23071 0.20416 0.18068 0.15989 0.23662 0.20756 0.18207 0.15971 0.14010 0.21-494 0.18691 0.16253 0.14133 0.12289 0.19542 0.16846 0.14523 0.12520 0.10793 0.17781 0.15197 0.12989 0.11102 0.09489 0.16192 0.13722 0.11629 0.09855 0.08352 11 12 13 14 15 16 17 18 19 20 0.25187 0.23107 0.21199 0.19449 0.17843 0.21763 0.19784 0.17986 0.16351 0.14864 0.18829 0.16963 0.13282 0.13768 0.12403 0.16312 0.14564 0.1.2004 0.11611 0.10367 0.141 50 0.12522 0.11081 0.09806 0.08678 0.12289 0.10780 0.09456 0.08295 0.07276 0.10686 0,09293 0.08081 0.07027 0.06110 0.09304 0.08021 0.06914 0.05961 0.05139 0.08110 0.06932 0.05925 0.05064 0.04328 0.07078 0.05998 0.05083 0.04308 0.03651 16 17 18 19 20 21 22 23 24 25 0.16370 0.15018 0.13778 0.1260 0.11597 0.13513 0.12285 0.11168 0.10153 0_09230 0.11174 0.10077 0.09069 0.08170 0.07361 0.09256 0.08264 0.07379 0.06588 0.05882 0.07680 0,06796 0.06014 0.05323 0.0-4710 0.06383 0,05599 0.04911 0.04308 0.03779 0.05313 0.0-4620 0.00017 0.03493 0.00038 0,04430 0.03819 0.03292 0.02838 0.02447 0.03699 0.03162 0.02702 0.02310 0.01974 0.03094 0.02622 0.02222 0.01883 0.01596 21 22 23 24 25 Periods 1% 4% 6% 7% ! 2 3 4 $ 1 1.00500 1.01003 1.01508 1.02015 1.02525 1.01000 1.02010 1.03030 1.04060 1.05101 1.01500 1.03023 1.04568 1.06136 1.07728 2% 1.02000 1.04040 1.06121 1.08243 1.10-08 36 1.030 1.05090 1.09273 1.12SSI 1.15927 1.04000 1.08160 1.12486 1.16986 1.21665 5% 1.05000 1.10250 1.15763 1.21551 1.27628 1.000) 1.12360 1.19102 1.26248 1.33823 1.07000 1.14490 1.22504 1.31080 1.40255 8% 1.08000 1.16640 1.25971 1.36049 1.46933 Periods 1 2 3 4 5 6 7 8 9 10 1.03038 1.03553 1.04071 1.04591 1.05114 1.12616 1.14869 1.17166 1.19509 1.21899 1.19405 1.22987 1.26677 1.30477 1.34392 1.26532 1.31593 1.36857 1.42331 1.48024 1.34010 1.40710 1.47746 1.55133 1.62889 1.41852 1.50363 1.59385 1.68948 1.79085 1.50073 1.60578 1.71819 1.83846 1.96715 1.58687 1.71382 1.85093 1.99900 2.15892 6 7 8 9 10 12 1.05640 1.06168 1.06.199 1.07232 1.07768 1.06152 1.07214 1.08286 1.09369 1.10462 1.11567 1.12683 1.13809 1.14947 1.16097 1.17258 1.18430 1.19615 1.20811 1.22019 1.09344 1.10984 1.12649 1.14339 1.16054 1.17795 1.19562 1.21355 1.23176 1.25023 1.26899 1.28802 1.30734 1.32695 1.34686 1.24337 1.26824 1.29361 1.31948 1.34587 1.38423 1.42576 1.46853 1.51259 1.55797 1.53945 1.60103 1.66507 1.73168 1.80094 1.71034 1.79586 1.88565 1.97993 2.07893 1.89830 2.01220 2.13293 2.26090 2.39656 2.10485 2.25219 2.40985 2.57853 2.75903 2.33164 2.31817 2.71962 2.93719 3.17217 EUR 35a TE 11 12 13 14 15 18 19 1.08 307 1.08849 1.09393 1.09940 1.10490 1.37279 1.40024 1.42825 1.45681 1.48595 1.60471 1.65285 1.70243 1.75351 1.80611 1.87298 1.94790 2.02582 2.10685 2.19112 2.18287 2.29202 2.40662 2.52695 2.65330 2.54035 2.69277 2.85434 3.02560 3.20714 2.95216 3.15882 3.37993 3.61633 3.86%68 3.42594 3.70002 3.99602 4.31570 4.66096 16 17 18 19 20 1.11042 1.11597 1.12155 1.12716 1.13280 1.23239 1.24472 1.25716 1.26973 1.28243 1.36706 1.38756 1.40838 1.42950 1.45095 1.51567 1.54598 1.57620 1.60844 1.64061 1.86029 1.91610 1.97359 2.03279 2.09378 2.27877 2.36992 2.46472 2.56330 2.66584 2.78596 2.92526 3.07152 3.22510 3.38635 3.39956 3.60354 3.81975 4.04893 4.29187 4.14056 4,43040 4.74053 5.07237 5.42743 5.03383 5.43654 5.87146 6.34118 6.84848 21 22 23 24 25 24 25 Periods Periods 1 2 3 4 $ 9 1.09000 1.18810 1.29503 1.41158 1.53862 10% 1.10000 1.21000 1.33100 1.46410 1.61051 11% 1.1 1000 1.23210 1.36763 1.51807 1.68506 12% 1.12000 1.25440 1.40493 1.57352 1.76234 13% 1.13000 1.27690 1.44290 1.63047 1.84244 14% 1.14000 1.29960 1.48154 1.688% 1.92541 15% 1.15000 1.32250 1.52088 1.74901 2.01136 16% 1.1600X 1.34560 1.56090 1.81064 2.10034 17% 1.17000 1.36890 1.60161 1.87389 2.19245 18% 1.18000 1.39240 1.64303 1.93878 2.28776 2 3 4 S 6 7 8 1.67710 1.82804 1.99256 2.17189 2.36736 1.77156 1.94872 2.14359 2.35795 2.59374 1.87041 2.07616 2.30454 2.55804 2.83942 1.97382 2.21068 2.47596 2.77308 3.10585 2.08195 2.35261 2.65844 3.00404 3.39457 2.19.497 2.50227 2.85259 3.25195 3.70722 2.31306 2.66002 3.05902 3.51788 4.04556 2.43640 2.82622 3.27841 3.80296 4.41144 2.56516 3.00124 3.51145 4.108.40 4.80683 2.69955 3.18547 3.75886 4.43545 5.23384 6 7 8 9 10 9 10 11 12 13 14 IS 2.58043 2.81266 3.06580 3.34173 3.64248 2.85312 3.13843 3.45227 3.79750 4.17725 3.15176 3.49845 3.88328 4.31044 4.78459 3.47855 3.89598 4.36349 4.88711 5.47357 3.83586 4.33452 4.89801 5.53475 6.25427 4.22623 4.81790 5.49241 6.26135 7.13794 4.65239 5.35025 6.15279 7.07571 8.13706 5.11726 5.93603 6.88579 7.98752 9.26552 5.62399 6.58007 7.69868 9.00745 10.53872 6.17593 7.28759 8.59936 10.14724 11.97375 11 12 13 14 1S 16 17 18 19 20 3.97031 4.32763 4.71712 5.14166 5.60441 4.59497 5.05447 5.55992 6.11591 6.72750 5.31089 5.89509 6.54355 7.26334 8.06231 6.13039 6.86604 7.68997 8.61276 9.64629 7.06733 7.98608 9.02427 10.19742 11.52309 8.13725 9.27616 10.57517 12.05569 13.74349 9.35762 10.76126 12.375-45 14.23177 16.36654 10.74800 12.46768 14.46251 16.77652 19.46076 12.33030 14.42616 16.87895 19.74838 23.10560 14.12202 16.67225 19.67325 23.21444 27.39303 16 17 18 19 20 21 22 23 24 25 6.10881 665860 7.25787 7.91 108 862308 7.40025 8.14027 8 95430 9.84973 10.83471 8.9.1917 9.93357 11.02627 12.23916 13.58846 10.80385 12.10031 13.55235 15.17863 17.00006 13.02109 14.71383 16.62663 18.78809 21.22054 15.66758 17.86104 20.36158 23.21221 26.46192 18.82152 21.61475 24.89146 28.62518 32.91895 22.57448 26.18610 30.37622 35.23642 40.87424 27.03355 31.62925 37.00623 43.29729 50.65783 32.32378 38.14206 45.00763 53.10901 02.6683 21 22 23 24 25