Exercise 14A-4 (Algo) Basic Present Value Concepts [LO14-7]

Fraser Company will need a new warehouse in eighteen years. The warehouse will cost $410,000 to build.

Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.

Required:

What lump-sum amount should the company invest now to have the $410,000 available at the end of the eighteen-year period? Assume that the company can invest money at: (Round your final answer to the nearest whole dollar amount.)

Present Value:

1. Seven percent

2. Twelve percent