How much is invested per barrel

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Q1. You are a buyer for a battery company and are investigating the purchase of lithium from an African company for $100 per barrel and $14 per barrel to process and package it before shipping.  This particular source requires an 15 month lead time with material and packaging costs paid up front (at time order is placed). Transportation is $4 per barrel and paid when received. If the risk free annual interest rate  is 10%, what is the value per barrel after received in the U.S.?  If it is received 3 months late, how much is invested per barrel when it is received? Assume monthly compounding.

Q2.James had a rich uncle who left her a trust fund of $200,000 that earn interest at an effective annual rate of 5%

A. If she receives $23,000 annually until the funds are gone, how many payments including the final partial payment, will she receive?

B. If she take out $30,000 immediately to buy  a car but no more, how much will she have in the fund at the end of 40 years when she retires?

C. If she wants the fund to be worth $1,000,000 in 45 years, how much can she withdraw today (single payment)?

D. What is the maximum amount that she can withdraw annually for 25 years, starting at the end of the coming year?

Reference no: EM13200281

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