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chaseashley24
chaseashley24
09.11.2019 • 
Business

On january 1, 2014, boston company completed the following transactions (use a 7 percent 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 addition 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, 2014.
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, 2014, and paid cash, $34,000. a five-year note payable is signed for the balance. the note will be paid in five equal year-end payments starting on december 31, 2014.
1. in transaction (a), determine the present value of the debt.
2-a. in transaction (b), what single sum amount must the company deposit on january 1, 2014?
2-b. what is the total amount of interest revenue that will be earned?
3. in transaction (c), determine the present value of this obligation.
4-a. in transaction (d), what is the amount of each of the equal annual payments that will be paid on the note?
4-b. what is the total amount of interest expense that will be incurred?

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