On January 1, Boston Company completed the following transactions (use a 7% annual interest rate for...
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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, EVA of $1, and PVA of $1) a. Promised to pay a fixed amount of $6,100 at the end of each year for eight years and a one-time payment of $115,200 at the end of the 8th year. b. Established a plant remodeling fund of $490,150 to be available at the end of Year 9. A single sum that will grow to $490,150 will be deposited on January 1 of this year. c. Agreed to pay a severance package to a discharged employee. The company will pay $75,100 at the end of the first year, $112,600 at the end of the second year, and $150,100 at the end of the third year. d. Purchased a $170,500 machine on January 1 of this year for $34,100 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 On January 1, Boston Company completed the following transactions (use a 7% annual interest rate for all transactions): ( FV of $1. PV of $1, EVA of $1, and PVA of $1) a. Promised to pay a fixed amount of $6,100 at the end of each year for eight years and a one-time payment of $115,200 at the end of the 8th year. b. Established a plant remodeling fund of $490,150 to be available at the end of Year 9. A single sum that will grow to $490,150 will be deposited on January 1 of this year. c. Agreed to pay a severance package to a discharged employee. The company will pay $75,100 at the end of the first year, $112,600 at the end of the second year, and $150,100 at the end of the third year. d. Purchased a $170,500 machine on January 1 of this year for $34,100 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
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Answer rating: 100% (QA)
Requirement 1 Present value of debt 115200 x 05820 67046 6100 x 59713 36425 Present Value 10... View the full answer
Related Book For
Financial Accounting
ISBN: 978-0078025556
8th edition
Authors: Robert Libby, Patricia Libby, Daniel Short
Posted Date:
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