P$6\mathrm{.}7($LO $2,3,4)($Time Value Concepts Applied to Solve Business Problems$)$ Answer the fol$-$

lowing questions related to Dubois Inc.

a$.$ Dubois Inc. has $$600,000$ to invest. The company is trying to decide between two alternative uses

of the funds. One alternative provides $$80,000$ at the end of each year for $12$ years, and the other is

to receive a single lump$-$sum payment of $$1,900,000$ 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

$$824,150.$ The purchase agreement specifies an immediate down payment of $$200,000$ and semian$-$

nual payments of $$76,952$ 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 $$800,000.$ Dubois accepts an

$8\%$ note due in $7$ 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 $$1,300,000$ by December $31,2030,$ to retire bonds outstanding.

The company deposits $$200,000$ on December $31,2020,$ 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 $$1,300,000$ is available

at the end of $2030.($The quarterly deposits will also earn at a rate of $10\%,$ compounded quarterly.$)$

$($Round to even dollars.$)$

P$6\mathrm{.}8($LO $4)($Analysis of Alternatives$)$ Ellison Inc., a manufacturer of steel school lockers, plans to

purchase a new punch press for use in its manufacturing process. After contacting the appropriate ven$-$

dors, the purchasing department received differing terms and options from each vendor. The Engineering

Department has determined that each vendor's punch press is substantially identical and each has a use$-$

ful life of $20$ years. In addition, Engineering has estimated that required year$-$end maintenance costs will

be $$1,000$ per year for the first $5$ years, $$2,000$ per year for the next $10$ years, and $$3,000$ per year for the

last $5$ years. Following is each vendor's sales package.

Vendor A: $$55,000$ cash at time of delivery and $10$ year$-$end payments of $$18,000$ each. Vendor

A offers all its customers the right to purchase at the time of sale a separate $20-$year maintenance