Question: EXERCISE 12A6 Basic Present Value Concepts [LO5] Fraser Company will need a new warehouse in five years. The warehouse will cost $500,000 to build. Required:

EXERCISE 12A–6 Basic Present Value Concepts [LO5]

Fraser Company will need a new warehouse in five years. The warehouse will cost $500,000 to build.

Required:

What lump-sum amount should the company invest now to have the $500,000 available at the end of the five-year period? Assume that the company can invest money at:

1. Ten percent.

2. Fourteen percent.

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