Question

1.In 1880 five aboriginal trackers were each promised the equivalent of 50 Australian dollars for helping to

capture

the notorious outlaw Ned Kelley. In 1998 the granddaughters of two of the trackers claimed that this reward had

not been paid. The prime minister stated that if this was true, the government would be happy to pay the $50.

However, the granddaughters also claimed that they were entitled to compound interest.

a.

How much was each entitled to if the interest rate was 3%? (Do not round intermediate calculations.

Round your answer to 2 decimal places.)

Future value

$

b.

How much was each entitled to if the interest rate was 6%? (Do not round intermediate calculations.

Round your answer to 2 decimal places.)

Future value

 

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Question

A factory costs $280,000. You forecast that it will produce cash inflows of $80,000 in year 1, $140,000 in year 2,

and $220,000 in year 3. The discount rate is 12%.

a. What is the value of the factory? Round 2 decimals

Value of the factory:

 

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