a.Derek Lee Inc. loans money to John Kruk Corporation in the amount of $800000. Lee accepts an

8% note due in 7 years with interest payable semiannually. After 2 years (and receipt of interest

for 2 years) Lee 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 Lee will

receive on the sale of the note?

b. Derek Lee Inc. wishes to accumulate $1300000 by December 31 2017 to retire bonds outstanding.

The company deposits $200000 on December 31 2007 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 $1300000

is available at the end of 2017. (The quarterly deposits will also earn at a rate of 10% compounded

quarterly.) (Round to even dollars.)