Business, 24.03.2020 18:07, maxgeacryne2199

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. Borrowed $115,000 for seven years. Will pay $6,000 interest at the end of each year and repay the $115,000 at the end of the 7th year.
b. Established a plant remodeling fund of $490,000 to be available at the end of Year 8. A single sum that will grow to $490,000 will be deposited on January 1 of this year.
c. Agreed to pay a severance package to a discharged employee. The company will pay $75,000 at the end of the first year, $112,500 at the end of the second year, and $150,000 at the end of the third year.
d. Purchased a $170,000 machine on January 1 of this year for $34,000 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.

Required:
1. In transaction (a), determine the present value of the debt. (Round your answer to the nearest whole dollar.)
2. In transaction (c), determine the present value of this obligation. (Round your answer to the nearest whole dollar.)
3-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 the nearest whole dollar.)
3-b. What is the total amount of interest expense that will be incurred? (Round your answer to the nearest whole dollar.)

Answers: 3

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On January 1, Boston Company completed the following transactions (use a 7% annual interest rate for...