Answer each question and SHOW YOUR WORK.

10. 1L 12, CHAPTER SIX TAKE HOMEWORK (SHOW WORK: PRACTICE THIS BY YOURSELF) Suppose an agribusiness company invests $600,000 in a new production line, and the production line then produces positive cash flow of $100,000 per year, what will be the payback period? Alabama Lumber is considering the purchase of a saw that costs $100,000 and which will generate $20,000 per year of net cash flow. What is the payback period for this capital investment? If Alabama Lumber is also considering the purchase of a conveyor system for $48,000, which will reduce sawmill transport costs by $12,000 per year, what then will be the payback period? If Alabama Lumber only has sufficient funds to invest in one of these projects, and if it were only using the payback method as the basis for its investment decision, will it buy the conveyor system, Why? Mrs. Thompson plans to place his money in a certificate of deposit (CD) that matures in three (3) months. The principal is $10,000 and 5% interest is earned annually. She wants to calculate how much interest she will earn in those three months. Help her! Lucy wants to borrow money from her mother, and she is offered a five-year, non-compounding loan of $7,000, with a 3% annual interest rate. What is Lucy's total interest expense? What is the compound interest on a $30,000 investment at 10% for 2 years? Find the future value of an investment of $15,000 at 5% compounding annually for 15 years. With reference to question #9; what will the value be when compounded at 10% semiannually for 20 years? Grandma promised you $14, 000 upon your graduation from TU in 4 years. How much should your Grandma deposit today to fulfil her promise should she earn 5% on her investment? Assuming you invest $1,000 in a certificate of deposit for 3 years at 10% annual rate of interest. What will your total interest be for 3 years? Assuming you invest $1,000 in a retirement account immediately after graduation. How much will you accumulate at the end of 40 years with interest compounding annually at 10%