On January 2, ABC Landscape bought the equipment with a base price of $36,000, and paid $2,000 freight and $2,000 in installation. The equipment has an estimated salvage value of $4,000 and an estimated useful life of 5 years. At the end of year 3, the company sells this equipment for $18,000. 9 How much is the straight line depreciation expense each year? 10 How much would the depreciation expense have been in year 1 if ABC used double-declining balance? 11 Assuming that the company used straight-line depreciation, what is the gain or loss on sale? 12 On April 1, Lincoln Lumber borrowed $20,000 at 9% interest, due in 4 months. How much will they repay when the note comes due? 13 On January 1, year 1, you invest $20,000 one time in an Individual Retirement Account earning 6%. How much will you have when you retire in 40 years? 14 You want to have $1,000,000 when you retire in 40 years. At 9% return, how much would you have to put aside today to avoid making yearly contributions in the future, and still have the $1,000,000? 15 You want to have $1,000,000 when you retire in 40 years. At 10% return, how much would you have to put aside each year to have $1,000,000 in 40 years? 16 Your win $10,000/year for 20 years in the lottery. Assuming a 7% return per year, how much are the payments worth now? 17 ABC Company buys equipment for $20,000 down and $10,000/year for 5 years. If interest rates are 7%/year, how much should we record as the cost of the equipment? 18 $100,000 of bonds sell at 97. How much are the proceeds? 19 $100,000 of bonds sell at 101. How much are the proceeds? 20 $100,000 of bonds sell at 102. The bonds mature in 4 years, and the interest rate is 10%. How much is interest expense? 21 $100,000 of bonds at 6% face value, maturing in 10 years are sold when the market rate of interest is 7%. How much are the proceeds from the sale of the bonds?