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, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.) a. Borrowed $119,000 for seven years. Will pay $8,000 interest at the end of each year and repay the $119,000 at the end of the 7th year. b. Established a plant remodeling fund of $493,000 to be available at the end of Year 8. A single sum that will grow to $493,000 will be deposited on January 1 of this year. c. Agreed to pay a severance package to a discharged employee. The company will pay $77,000 at the end of the first year, $114,500 at the end of the second year, and $152,000 at the end of the third year. d. Purchased a $180,000 machine on January 1 of this year for $36,000 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 nearest whole dollar.) 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 $119,000 for seven years. Will pay $8,000 interest at the end of each year and repay the $119,000 at the end of the 7th year. b. Established a plant remodeling fund of $493,000 to be available at the end of Year 8. A single sum that will grow to $493,000 will be deposited on January 1 of this year. c. Agreed to pay a severance package to a discharged employee. The company will pay $77,000 at the end of the first year, $114,500 at the end of the second year, and $152,000 at the end of the third year. d. Purchased a $180,000 machine on January 1 of this year for $36,000 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 nearest whole dollar.)
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Related Book For
Financial Accounting
ISBN: 978-0078025556
8th edition
Authors: Robert Libby, Patricia Libby, Daniel Short
Posted Date:
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