Questions -
1. Fishbone Corporation bought a new machine and agreed to pay for it in equal annual installments of $4,250 at the end of each of the next 10 years. Assuming that a prevailing interest rate of 9% applies to this contract, how much should Fishbone record as the cost of the machine?
2. Dubois Inc. has $605,700 to invest. The company is trying to decide between two alternative uses of the funds. One alternative provides $90,267 at the end of each year for 10 years, and the other is to receive a single lump-sum payment of $1,571,028 at the end of the 10 years. Which alternative should Dubois select? Assume the interest rate is constant over the entire investment.