Current Attempt in Progress Ivanhoe Inc. is considering leasing a car from Jackie Inc. for a period of four years. The fair value of the car today is $37,800. The current market interest rate for financing such a vehicle is 18% compounded semi-annually. Below is a time diagram of this situation. Present Value PV-04 $37,800 Interest Rate 1-9% Pm-7 3 Number of Periods Calculate the semi-annual lease payment assuming that the payment is made at the end of the period. (Round answer to 2 decimal places, e.g. 5,275.25.) Semi-annual lease payment $ Assume that you want to invest a sum of money at 11% in order to have $1,500 (a) at the end of one year (b) at the end of two years. Calculate the present value using PV tables. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answers to 2 decimal places, eg. 5,275.25.) Click here to view Table A.2-PRESENT VALUE OF 1-(PRESENT VALUE OF A SINGLE SUM) Click here to view Table A.4-PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 (a) Present value $ (b) Present value $ Assume that you deposit $1,400 in the Last Canadian Bank, where it will earn simple interest of 11% per year, and you deposit another $1,400 in the First Canadian Bank, where it will earn interest of 11% per year compounded annually. Also assume that in both cases you will not withdraw any interest until three years from the date of deposit. Calculate interest to be received and the accumulated year-end balances. (Round answers to 2 decimal places, e.g. 15.25) Last Canadian Bank First Canadian Bank Simple Interest Accumulated Year-End Balance Accumulated Compound Interest Year-End Balance Year 1 $ $ Year 2 Year 3 $ Sandhill Company purchases a licence from Redo Industries for the right to manufacture and sell products using Redo's processes and technologies. Sandhill estimates it will earn $6,800 per year from this licence over the next 10 years (at the end of each year). Assume Sandhill uses 12% as the discount rate. What is the value in use to Sandhill of this licence? (Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to O decimal places, e.g. 5,275.) Click here to view Table A.4-PRESENT VALUE OF AN ORDINARY ANNUITY OF 1 The value in use $ Daniel Halabi is a financial executive with Blossom Enterprises. Although Daniel has not had any formal training in finance or accounting, he has a good sense for numbers and has helped the company grow from a very small company ($480,000 in sales) to a large operation ($43.20 million in sales). With the business growing steadily, however, the company needs to make a number of difficult financial decisions in which Daniel feels a little over his head. He therefore has decided to hire a new employee with numbers expertise to help him. As a basis for determining whom to employ, he has decided to ask each prospective employee to prepare answers to questions relating to situations he has encountered recently. The following are the facts for the first question asked of prospective employees: In 2022, Blossom Enterprises negotiated and closed a lease contract for newly constructed truck terminals and freight storage facilities. On January 1, 2023, Blossom took possession of the leased property. The 20-year lease is effective for the period January 1, 2023, through December 31, 2042. Advance rental payments of $510,000 are payable to the lessor (owner of facilities) on January 1 of each of the first 10 years of the lease term. Advance payments of $400,000 are due on January 1 for each of the last 10 years of the lease term. Blossom has an option to purchase all the leased facilities for $1 on December 31, 2042. At the time the lease was negotiated, the fair value of the truck terminals and freight storage facilities was approximately $4.59 million. If the company had borrowed the money to purchase the facilities, it would have had to pay 12% interest. Should the company have purchased rather than leased the facilities? (a) Calculate the present value of the payments required of Blossom Enterprises under the lease agreement using Excel functions for an annuity due. (Round answers to 2 decimal places, e.g. 5,275.25.) Follow these steps: 1. Calculate the present value of the future cash flows for the advance rental payments of $510,000 for the period from January 1, 2023, through December 31, 2032. Hint: If Calculate the present value of the payments required of Blossom Enterprises under the lease agreement using Excel functions for an annuity due. (Round answers to 2 decimal places, e.g. 5,275.25.) Follow these steps: 1. 2. 3. 4. Calculate the present value of the future cash flows for the advance rental payments of $510,000 for the period from January 1, 2023, through December 31, 2032. Hint: If using factor tables, because the lease payments are due at the beginning of each year, use the present value tables for nine years and add the first payment of January 1, 2023, in your calculation. Calculate the present value of the future cash flows for the advance rental payments of $400,000 for the 10-year period beginning January 1, 2033. Hint: If using factor tables, as in the first step, use the present value table for 10 years for the present value at January 1, 2032. Take the calculation result of step 2 and arrive at the present value of that amount at January 1, 2023, by using nine years in your discount calculation. Add the result of the first and third steps to arrive at the total cost of leasing. $ Assume that Indigo Paper Co. has several minor lawsuits outstanding. To determine the amount of liability to recognize on the statement of financial position, Indigo decides to use expected cash flow techniques. Based on discussions with their lawyers, Indigo has developed the following cash flow estimates, and related probabilities: Year Cash Flow Estimate Probability Assessment 2023 $4,300 30% $6,500 45% $10,200 25% 2024 $5,200 20% $7,400 50% $9.100 30% Based on these estimates; and assuming a risk-free rate of 5%, what is the present value of expected cash flows that Indigo should record on its statement of financial position at the end of 2022? (Round answer to 2 decimal places, e.g. 52.75. For calculation purposes, use 5 decimal places as displayed in the factor table provided.) Click here to view Table A.2-PRESENT VALUE OF 1-(PRESENT VALUE OF A SINGLE SUM) Present value of expected cash flows at the end of 2022 $ Pharoah Company issues a 7-year, 8% mortgage note on January 1, 2023, to obtain financing for new equipment. The terms provide for semi-annual instalment payments of $112,970. What were the cash proceeds received from the issue of the note? (For calculation purposes, use 5 decimal places as displayed in the factor table provided. Round final answer to 2 decimal places, e.g. 5,275.25.) Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Cash proceeds $