On January 1, Ellsworth Company completed the following transactions (use an 8% annual interest rate for all transactions): (FV of $1, PV of $1, FVA of $1, and PVA of $1)

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

Borrowed $2,750,000 to be repaid in five years. Agreed to pay a fixed amount of $165,000 at the end of each year for five years and a one-time payment of $2,750,000 at the end of the 5th year.

Established a plant remodeling fund of $2,500,000 to be available at the end of Year 10. A single sum that will grow to $2,500,000 will be deposited on January 1 of this year.

Purchased a $780,000 machine on January 1 of this year and paid cash, $415,000. A four-year note is signed for the balance. The note will be paid in four equal year-end payments starting on December 31 of this year.

Required:

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

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

2-b. In transaction (b), what is the total amount of interest revenue that will be earned?

3-a. In transaction (c), what is the amount of each of the equal annual payments that will be paid on the note?

3-b. In transaction (c), what is the total amount of interest expense that will be incurred?