Part one

An investment will pay $15,000 at the end of each year for eight years and a one-time payment of $150,000 at the end of the eighth year. (FV of $1, PV of $1, FVA of $1, and PVA of $1)

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

Required:

Determine the present value of this investment using a 7 percent annual interest rate.

Note: Round your intermediate calculations and final answer to nearest whole dollar.

What is the present value of investment?

Part two

The Jenkins Corporation has purchased an executive jet. The company has agreed to pay $200,000 per year for the next 10 years and an additional $1,000,000 at the end of the 10^th year. The seller of the jet is charging 6 percent annual interest. (FV of $1, PV of $1, FVA of $1, and PVA of $1)

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

Required:

Determine the liability that would be recorded by Jenkins.

What is the present value?