FA Manufacturers muse make several investment decisions related to its business operations, interest is compounded annually. Analyze the following independent situations to help FA make a profitable investment.
a. FA Manufacturers reported a $150,000 debt that matures in eight years. In order to accumulate sufficient funds to pay for the debt, the company decided to make eight equal annual payments into a fund paying 5% interest. What amount must FA Manufacturers deposit into the fund m the end of each year so that the company will be able to liquidate its debt?
b. On January 1, 2019, FA Manufacturers decided to purchase a piece of heavy machinery. FA agreed to pay $ 50,000 on the date of purchase and would like to pay the remaining balance with six annual installments of $20,000 commencing m the end of 2019. Given an interest rate of 8%, what value should FA give to the machinery?
c. FA purchased a new machine and wants to pay for it using five equal annual installments of $ 40,000. The payments start in one year. Given an interest rate of 10%. at what amount should FA value the machine?