1. On January 1, 2014, Kline Company decided to begin accumulating a fund for asset replacement five years later. The company plans to make five annual deposits of $50,000 at 9% each January 1 beginning in 2014. What will be the balance in the fund, on January 1, 2019 (one year after the last deposit)? The following 9% interest factors may be used.

Present Value of Future Value of

Ordinary Annuity Ordinary Annuity

4 periods 3.2397 4.5731

5 periods 3.8897 5.9847

6 periods 4.4859 7.5233

a. $326,165

b. $299,235

c. $272,500

d. $250,000

2. James leases a ski chalet to his best friend, Janet. The lease term is five years with $20,000 annual payments due at the beginning of each year. What is the present value of the payments discounted at 8% per annum?

a. $86,243.

b. $79,855.

c. $76,346.

d. $72,488.

3. On January 1, 2014, Ball Co. exchanged equipment for a $500,000 zero-interest-bearing note due on January 1, 2017. The prevailing rate of interest for a note of this type at January 1, 2014 was 10%. What amount of interest revenue should be included in Ball's 2015 income statement?

a. $0

b. $37,500

c. $41,250

d. $50,000

4. On January 1, 2014, Haley Co. issued ten-year bonds with a face amount of $4,000,000 and a stated interest rate of 8% payable annually on January 1. The bonds were priced to yield 10%. Present value factors are as follows:

At 8% At 10%

Present value of 1 for 10 periods 0.463 0.386

Present value of an ordinary annuity of 1 for 10 periods 6.710 6.145

The total issue price of the bonds was

a. $4,000,000.

b. .$3,510,400.

c. $3,680,000.

d. $3,920,000.

5. Answer the following three problems with this information set) Depoole Company is a manufacturer of industrial products and employs a calendar year for financial reporting purposes. These questions present several of Depoole