On January 1, 2014, Boston Company completed the following transactions (use a 8 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 $106,000 for eight years. Will pay $8,480 interest at the end of each year and repay the $106,000 at the end of the 8th year.

b. Established a plant addition fund of $590,000 to be available at the end of year 4. A single sum that will grow to $590,000 will be deposited on January 1, 2014.

c. Agreed to pay a severance package to a discharged employee. The company will pay $86,000 at the end of the first year, $130,500 at the end of the second year, and $139,000 at the end of the third year.

d. Purchased a $250,000 machine on January 1, 2014, and paid cash, $37,000. A four-year note payable is signed for the balance. The note will be paid in four 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?