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P9-11 (Algo) Computing Present Values LO9-7, 9-8

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On January 1, Boston Company completed the following transactions (use a 7% annual interest rate for all transactions): (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

1. Promised to pay a fixed amount of $8,000 at the end of each year for seven years and a one-time payment of $119,000 at the end of the 7th year.
2. Established a plant remodeling fund of $493,000 to be available at the end of Year 8. A single sum that will grow to $493,000 will be deposited on January 1 of this year.
3. Agreed to pay a severance package to a discharged employee. The company will pay $77,000 at the end of the first year, $114,500 at the end of the second year, and $152,000 at the end of the third year.
4. Purchased a $180,000 machine on January 1 of this year for $36,000 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.

rev: 04_08_2019_QC_CS-165140

P9-11 Part 1

Required:

1. In transaction (a), determine the present value of the debt. (Round your answer to nearest whole dollar.)