On January 1, Boston Company completed the following transactions (use a 7 percent annual interest rate for all transactions):

a. Borrowed $115,800 for seven years. Will pay $6,400 interest at the end of each year and repay the $115,800 at the end of the 7th year.

b. Established a plant remodeling fund of $490,600 to be available at the end of Year 8. A single sum that will grow to $490,600 will be deposited on January 1 of this year.

c. Agreed to pay a severance package to a discharged employee. The company will pay $75,400 at the end of the first year, $112,900 at the end of the second year, and $150,400 at the end of the third year.

d. Purchased a $172,000 machine on January 1 of this year for $34,400 cash. A five-year note is signed for the balance. The note will be paid in five equal year-end payments starting on December 31 of this year.

Show Computations and round to the nearest whole dollar:

1. In transaction a, determine the present value of the debt.

2a. In transaction b, what single sum amount must the company deposit on January 1 of this year?

2b. What is the total amount of interest revenue that will be earned?

3. In transaction c, determine the present value of this obligation.

4a. In transaction d, what is the amount of each of the equal annual payments that will be paid on the note?

4b. What is the total amount of interest expense that will be incurred?