What is the amount dubois will receive on the sale

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Reference no: EM131929315

Questions - Answer the following questions related to Dubois Inc.

(a) Dubois Inc. has $624,300 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $87,184 at the end of each year for 12 years, and the other is to receive a single lump sum-payment of $1,959,322 at the end of the 12 years. Which alternative should Dubois select? Assume the interest rate is constant over the entire investment.

(b) Dubois Inc. has completed the purchase of new Dell computers. The fair value of the equipment is $829,000. The purchase agreement specifies an immediate down payment of $235,000 and semiannual payments of $76,926 beginning at the end of 6 months for 5 years. What is the interest rate, to the nearest percent, used in discounting this purchase transaction?

(c) Dubois Inc. loans money to John Kruk Corporation in the amount of $803,600. Dubois accepts an 8% note due in 6 years with interest payable semiannually. After 2 years (and receipt of interest for 2 years), Dubois needs money and therefore sells the note to Chicago National Bank, which demands interest on the note of 10% compounded semiannually. What is the amount Dubois will receive on the sale of the note?

(d) Dubois Inc. wishes to accumulate $1,374,000 by December 31, 2022, to retire bonds outstanding. The company deposits $235,000 on December 31, 2012, which will earn interest at 10% compounded quarterly, to help in the retirement of this debt. In addition, the company wants to know how much should be deposited at the end of each quarter for 10 years to ensure that $1,374,000 is available at the end of 2022.

Reference no: EM131929315

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