E$9-13($Algo$)$ Computing Four Present Value Problems LO $9-7$

On January $1$ of this year, Skamania Company completed the following transactions $($assume a $9\%$ annual interest rate$)$: $(FV$ of $$1,$ PV of

$$1,$ FVA of $$1,$ and PVA of $$1)$

Note: Use the appropriate factor$($s$)$ from the tables provided.

a$.$ Bought a delivery truck and agreed to pay $$61,600$ at the end of three years.

b$.$ Rented an office building and was given the option of paying $$11,600$ at the end of each of the next three years or paying

$$29,600$ immediately.

c$.$ Established a savings account by depositing a single amount that will increase to $$93,200$ at the end of seven years.

d$.$ Decided to deposit a single sum in the bank that will provide $9$ equal annual year$-$end payments of $$41,600$ to a retired

employee $($payments starting December $31$ of this year$).$

Required:

a$.$ What is the cost of the truck that should be recorded at the time of purchase?

b$.$ Which option for the office building results in the lowest present value?

c$.$ What single amount must be deposited in this account on January $1$ of this year?

d$.$ What single sum must be deposited in the bank on January $1$ of this year?

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