# Question: The following cases are each independent of the others Required 1 Sam

The following cases are each independent of the others.

Required:

1. Sam Lilliam places $5,000 in a savings account that pays 3 percent. Suppose Sam leaves the original deposit plus any interest in the account for two years. How much will Sam have in savings after two years?

2. Suppose that the parents of a 12-year-old son want to have $80,000 in a fund six years from now to provide support for his college education. How much must they invest now to have the desired amount if the investment can earn 4 percent? 6 percent? 8 percent?

3. Killian Manufacturing is asking $500,000 for automated equipment, which is expected to last six years and will generate equal annual net cash inflows (because of reductions in labor costs, material waste, and so on). What is the minimum cash inflow that must be realized each year to justify the acquisition? The cost of capital is 8 percent.

Required:

1. Sam Lilliam places $5,000 in a savings account that pays 3 percent. Suppose Sam leaves the original deposit plus any interest in the account for two years. How much will Sam have in savings after two years?

2. Suppose that the parents of a 12-year-old son want to have $80,000 in a fund six years from now to provide support for his college education. How much must they invest now to have the desired amount if the investment can earn 4 percent? 6 percent? 8 percent?

3. Killian Manufacturing is asking $500,000 for automated equipment, which is expected to last six years and will generate equal annual net cash inflows (because of reductions in labor costs, material waste, and so on). What is the minimum cash inflow that must be realized each year to justify the acquisition? The cost of capital is 8 percent.

**View Solution:**## Answer to relevant Questions

Hepworth Communications produces cell phones. One of the four major electronic components is produced internally. The other three components are purchased from external suppliers. The electronic components and other parts ...Each of the following scenarios is independent. All cash flows are after-tax cash flows. Required: 1. Patz Corporation is considering the purchase of a computer-aided manufacturing system. The cash benefits will be $800,000 ...Manufacturing produces a component used in its production of washing machines. The time to set up and produce a batch of the components is two days. The average daily usage is 800 components, and the maximum daily usage is ...For the theory of constraints, which of the following determines the production rate of the plant? a. Local efficiency measures that encourage production of excess inventory just in case demand is greater than expected b. ...See Cornerstone Exercise 20.4. Fisher Company has three sequential processes: cutting, welding, and assembly. Assume that the optimal mix is Component A = 0 units per week; and Component B = 30 units per week. Demand is ...Post your question