Dubois inc has completed the purchase of new dell computers


a) Dubois Inc. has completed the purchase of new Dell computers. The fair value of the equipment is $824,400. The purchase agreement specifies an immediate down payment of $227,800 and semiannual payments of $69,940 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?

b) Dubois Inc. loans money to John Kruk Corporation in the amount of $838,800. Dubois accepts an 8% note due in 7 years with interest payable semi annually. 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 semi annually. What is the amount Dubois will receive on the sale of the note?

c) Dubois Inc. wishes to accumulate $1,350,000 by December 31, 2024, to retire bonds outstanding. The company deposits $227,800 on December 31, 2014, 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 $1,350,000 is available at the end of 2024. (The quarterly deposits will also earn at a rate of 10%, compounded quarterly.)

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Financial Management: Dubois inc has completed the purchase of new dell computers
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