P9-11 (Algo) Computing Present Values LO9-7, 9-8

[The following information applies to the questions displayed below.] 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.)

1. Promised to pay a fixed amount of $7,300 at the end of each year for eight years and a one-time payment of $117,600 at the end of the 8th year.
2. Established a plant remodeling fund of $491,950 to be available at the end of Year 9. A single sum that will grow to $491,950 will be deposited on January 1 of this year.
3. Agreed to pay a severance package to a discharged employee. The company will pay $76,300 at the end of the first year, $113,800 at the end of the second year, and $151,300 at the end of the third year.
4. Purchased a $176,500 machine on January 1 of this year for $35,300 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.

P9-11 Part 1

Required:

1. In transaction (a), determine the present value of the debt. (Round your answer to nearest whole dollar.)

2-a. In transaction (b), what single sum amount must the company deposit on January 1 of this year? (Round your answer to nearest whole dollar.)

3. In transaction (c), determine the present value of this obligation. (Round your answer to nearest whole dollar.)

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.)

4-b. What is the total amount of interest expense that will be incurred? (Round your answer to nearest whole dollar.)

2-b. What is the total amount of interest revenue that will be earned? (Round your answer to nearest whole dollar.)