Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The answer for (a.) is $106,324 if needed, thank you in advance! On January 1, Boston Company completed the following transactions (use a 7% annual

image text in transcribedimage text in transcribedimage text in transcribed

The answer for (a.) is $106,324 if needed, thank you in advance!

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.) a. Promised to pay a fixed amount of $6,500 at the end of each year for eight years and a one-time payment of $116,000 at the end of the 8th year. b. Established a plant remodeling fund of $490,750 to be available at the end of Year 9. A single sum that will grow to $490,750 will be deposited on January 1 of this year. c. Agreed to pay a severance package to a discharged employee. The company will pay $75,500 at the end of the first year, $113,000 at the end of the second year, and $150,500 at the end of the third year. d. Purchased a $172,500 machine on January 1 of this year for $34,500 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. 2-a. In transaction (b), what single sum amount must the company deposit on January 1 of this year? (Round your answer to nearest whole dollar.) Amount to deposit 2-b. What is the total amount of interest revenue that will be earned? (Round your answer to nearest whole dollar.) Interest revenue $ 2 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.) a. Promised to pay a fixed amount of $6,500 at the end of each year for eight years and a one-time payment of $116,000 at the end of the 8th year. b. Established a plant remodeling fund of $490,750 to be available at the end of Year 9. A single sum that will grow to $490,750 will be deposited on January 1 of this year. c. Agreed to pay a severance package to a discharged employee. The company will pay $75,500 at the end of the first year, $113,000 at the end of the second year, and $150,500 at the end of the third year. d. Purchased a $172,500 machine on January 1 of this year for $34,500 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. 3. In transaction (c), determine the present value of this obligation. (Round your answer to nearest whole dollar.) Present value 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.) a. Promised to pay a fixed amount of $6,500 at the end of each year for eight years and a one-time payment of $116,000 at the end of the 8th year. b. Established a plant remodeling fund of $490,750 to be available at the end of Year 9. A single sum that will grow to $490,750 will be deposited on January 1 of this year. c. Agreed to pay a severance package to a discharged employee. The company will pay $75,500 at the end of the first year, $113,000 at the end of the second year, and $150,500 at the end of the third year. d. Purchased a $172,500 machine on January 1 of this year for $34,500 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. 4-a. In transaction (d), what is the amount of each of the equal annual payments that will be paid on the note? (Round your answer to nearest whole dollar.) Annual payments 4-b. What is the total amount of interest expense that will be incurred? (Round your answer to nearest whole dollar.) Interest expense

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Options Futures And Other Derivatives

Authors: John C. Hull

4th Edition

0130224448, 9780130224446

More Books

Students also viewed these Finance questions