ACCOUNTNG2101/6101-TESTINGYOURKNOWLEDGE Page 1 CHAPTER 6 NOTE: Be sure to support all your answers with clearly presented and labeled calculations (use extra pages If necessary.) In addition, be sure to note the type of problem you are solving: e.g., PV of Single Sum; FV of Single Sum; PV of ordinary annulty (or annuity due); FV of ordinary annulty (or annulty due). Round all answers to the nearest dollar. 1) The Gershwin Company plans to contribute $3,000,000 per year into a plant expansion fund -with the first payment planned for January 1, 20x1. Fifteen payments will be made. REQUIRED: Determine the total amount in the fund on January 1, 20x15, assuming the fund earns interest at an annual rate of 6%, compounded annually. 2) On December 31, 20x1 the Carmichael Company provided plumbing services for the Cahn Company. The Carmichael Company would like to earn as much as possible for its services; the company does not need a cash payment immediately. Cahn Company offered Carmichael Company several different forms of payment, as follows: a) A non-interest bearing note for $200,000 due on December 31, 20x4. b) Three annual payments of $64,000, with the first payment occurring on December 31, 20x2. c) A 3%, $180,000 note due on December 31, 20x4. Interest payments would be made on December 31, 20x2, December 31, 20x3, and December 31, 20x4. The fair value of the services is not known and the notes are not readily marketable. Under the current circumstances, Carmichael recently had to pay 6% interest for money that it borrowed; Cahn Company was recently charged 5% interest on money that it borrowed. REQUIRED: Which alternative method of payment should Carmichael choose