[f]il f6-z (Time Value Concepts Applied to Solve Business Problems) Ansu'er the folkiiving questions

related to Dubois Inc.

(a) Dr&ois Inc. has 5600,000 to inr.est. The company is trytrg to decide bett,een tu'o alternative Llses
of the funds. One alternative pror.ides 580,000 at the end of each year for 12 years, and the other
is to receive a single lump-sr.un payr.nent of 51,900,000 at the end of the 12 years. Which alterna-
tir.e should Dr.rbois selcct? Assrrme the interest rate is constant over the entire irx'estment.
(b) Dubois Inc. has compieted the purchase of nen iPad computers. The fair value of the equipment
is 5824,150. The purchase agreelneilt specifies an imrnediate don,tr payment of 5200,000 and semi-
annual payments of 976,952 begir-rning at the end of 6 months for 5 years. What is the interest rate,
to the nearest percent, used in discounting this pr-rrchase transaction?
(c) Dubois Inc. loans mol"rey to John Krtik Corporation in the anrount of 5800,000. Dulrois accepts an
8olo r-rote due in 7 years u,ith interest pal,able semiannualil,. After 2 years (and receipt of interest
for 2 years), Dubois needs mone1, and tirerefore se1ls the note to Chicago Nationai Bank, rvhicl-r
demands interest on the note of 10o1, cornporu-rded semiannuail;r \{hat is the atnottut Dubois n'ill
receive on the sale of the note?
(d) Dubois Inc. rvishes to accurnulate $1,300,000 bv December 37,2020, to retire bonds outstancling.
Tl're compar"rl, deposits 5200,000 on Decernlrer 31,2010, rvhich u'i11 earn interest at 10ol) compotulded
quarterly, to help iu the retirernent of this debt. In addition, the company u'ants to knou'hol'
much shouid be deposited at the end of each r}-rarter for 10 1,9615 to enslrre that 51,300,000 is at'ail-
able at the end o12020. (The quarterly deposits u,i1i also earn at a rate of 10?o, compolrnded quar-
terlv.) (Round to even do1lars.)